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UN Climate Conference: Social development comes first

Volume No. 026 December 2010



Government Message Board: Losing the charm offensive ECONOMY

Currency War: All in the mind?


CROSSROADS Is a national family planning policy still necessary?

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Published by China Newsweek Corporation Publisher: Liu Beixian Executive Directors: Liu Beixian, Zhou Jianming Editor-in-chief: Peng Weixiang

With GDP off the list, how about some social development targets?


he Fifth Plenary Session of the 17th Central Committee of the Communist Party of China was held in Beijing from October 15 to 18. After its conclusion, a communiqué was issued regarding key targets for economic development in the country’s 12th five-year plan (201115). For the first time, the communiqué did not include a specific GDP growth target, which, to many, indicates that the Party may have realized that the greatest challenge facing the nation is not economic growth, but fighting social injustice. Calling the 2011-2015 a "critical period for China to build a moderately prosperous society in a comprehensive way," the communiqué admits that China faces “foreseeable and unforeseeable risks and challenges." The document does not elaborate on the “risks,” but anyone familiar with Chinese affairs should be able to conclude that they stem from not just from an unbalanced budget, but from an unbalanced society. While lacking background, the communiqué does set various economic targets such as promoting economic restructuring, maintaining stable and relatively fast economic growth, and driving domestic consumption. This is a song we’ve heard many times before, but now the beat is changing. In a speech in late September, President Hu Jintao advocated an “inclusive growth” model. The brainchild of economists from the Asian Development Bank in 2007, inclusive growth means spreading the benefits of economic globalization and development among all regions and people in order to realize balanced economic and social progression through sustainable development. This glamorous new concept was heatedly discussed during this month’s plenary session, and

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many speculate that the top leaders are gearing up for a new era with society at the top of the agenda. By dropping GDP growth targets, the performance of local officials will no longer be simply evaluated by their ability to get rich. This means a shake-up of the entire system, as GDP growth has been the overriding aim of all local governments since China’s opening-up. Moreover, the fundamental cause of our socalled “unbalanced economy” stems from the unbalanced division of power between officials

“This is a song we’ve heard many times before, but now the beat is changing.”

and the public, the political haves and have-nots, which leads to a distorted distribution of the fruit of China’s economic miracle. If this issue is not addressed, more “risks and challenges” will lie ahead. The top leadership, apparently aware of this, has once again stressed the importance of reform. But they should also be mindful that “reform” should not be limited to economic restructuring, but broadened into an overhaul of social, political and cultural institutions to address social injustice. There’s no other way to “moderate prosperity.” 

Editorial Office Managing Editor: Zheng Zhonghai Advisor: Liu Dizhong Senior Editor: Yang Yi Copy Editors: Stephen George, Jack Smith Lead Writer: Yu Xiaodong Editors: Wang Yan, Chen Dongyi, Yuan Ye, Xie Ying First Reader: Wesley Jacks Address: 5th Floor, 12 Baiwanzhuang South Street, Xi Cheng District, Beijing, China Post Code: 100037 Tel: 86-10-88395566 Fax: 86-10-88388045 Email: Art Department Art Director: Philip Jones Photo Director/Illustrator: Wu Shangwen Marketing Office China Newsweek Corporation President: Peng Weixiang Chief Executive: Fred Teng Tel: 1-212-481-2510 Fax: 1-212-481-2503 Address: Suite 1101, 15 East 40th Street, New York, NY 10016, USA Email: Toronto Office Director: Lai Hailong Address: 51 Halstead, Drive Markham, ON Canada L3R7Z4 Tel: 1-905-604-6150 Fax: 1-905-604-6170 Email: Marketing Director for China: Wang Chenbo Account Manager for China: Yu Miao Tel: 86-10-88395566 ext 178 Circulation Manager for China: Sun Zhongyi Tel: 86-10-88395566 ext 143 Advertising Director for the US: Gao Weiwei Tel: 1-212-481-2510 Marketing Promoter for the US: Jerry Meng Tel: 1-212-481-2510 New York Office: Jing Xiaolin, Wei Xi, Sun Yuting Washington Office: Wu Qingcai, Li Jing Los Angeles Office: Zhang Wei San Fransisco Office: Liu Dan London Office: Wei Qun Tokyo Office: Sun Ran Paris Office: Wu Weizhong Bangkok Office: Gu Shihong Kuala Lumpur Office: Zhao Shengyu Moscow Office: Tian Bing Legal Advisor: Allen Wu ISSN 1943-1902


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Thirty Years On




With GDP off the list, how about some social development targets?


Jiaolong Submersible: Plumbing the Depths


Thirty Years On Birth of the One Child Policy/ Enduring Memories/ What’s Next?

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Exchange Rate Dispute: An American Problem? Online Politics: Progress in Dilemma


Mitigation Committees: Mediate or Litigate? Nut Harvest: Blood Pecans Academic Attacks: Fraud Feud Gets Bloody

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Super Port: A New Landmark Banking Security: Keeping the Money Safe Rare Earth Trade Disputes: A New Test to Sino-Japan Relations Group Purchase: The Discount Explosion State-Owned News Organisations: Split Personalities Soul of the Shoes

Emissions Reduction: “Beyond our Reach”

Photo by ???

Since China pioneered the controversial“One Child Policy”in 1980, its implementation has a left an indelible mark on every Chinese household and, while reducing pressure on the social infrastructure of the world’s most populous nation, has also burdened a generation with a legacy of social, economic and political complications. Thirty years on, NewsChina examines the past, present and possible future of China’s most contentious piece of social legislation.




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Oral Histories: The Other Side of the Story Zhang Jingsheng: China’s Kinsey Heshun: Distance is Bliss

Cover Illustration by Wu Shangwen

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MEDIA FOCUS Xinmin Weekly October 12, 2010

NewsChina Chinese Edition

September 24, 2010

Qilu Evening News October 15, 2010

Overnight Marriages

Final Whistle? A nationwide campaign against corruption among soccer officials came to a head in September with the detention of the former deputy chairman of the China Football Association, Xie Yalong. Liu Peng, minister of the General Administration of Sports, made his first public response to the campaign in early October, expressing his determination to implement institutional reforms. However, his speech has been criticized by disillusioned fans as an attempt to end the floundering campaign. The China Football Association acts as both the operator and overseer of Chinese soccer, and corruption has been reported to be rife among its top brass. Yet, despite strong calls for reform, this highly-publicized campaign has claimed few high-profile scalps. Lu Jun, one of the most prominent referees in the country who was detained by police for rigging matches, reportedly detailed a chain of corruption involving soccer clubs and corporate interests bribing officials and players alike. State TV, however, only aired a very sketchy segment on the confession, with most details missing. Some fans have already despaired, a popular joke being that “to end corruption in Chinese soccer, we’ll have to imprison the entire sport.”


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The Brawn of Brains Government statistics have proudly claimed the “production” of more doctorate degrees than ever before. Appropriately, the relationship between tutors and their PhD students seems increasingly workmanlike. Students reportedly call tutors “boss” and are flocking towards profitoriented research, with less lucrative academic fields neglected. Since instructors determine who will graduate, students focus on the research goals of their tutors rather than independent study, with academics lambasted in the media as exploiters of “cheap labor.” Tutors have fought back with claims that few students now pursue doctorate-level study out of academic interest, and are merely trying to land a better-paid job. Others complain that the current education system necessitates an industrial mindset, arguing that if they fail to raise funds from commercial projects to finance their research they could lose their jobs. Nanfengchuang

October 18, 2010

Time to Give Back? China’s 12th Five-year Plan (2011-2015) will focus on reducing the nation’s income disparity rather than the pursuit of national wealth, according to the fifth plenary session of the CPC Central Committee held in October. During the past 30 years, China’s economic growth has depended on the over-exploitation of resources and unfair income distribution, making one of the government’s key tasks to transform its economic growth model into one of “inclusive growth,” as proposed by President Hu Jintao. There are also whispers of systematic political reforms to help narrow the gap between rich and poor, urban and rural. Analysts warn that any such reform is unlikely to gain favor with China’s powerful and privileged, and call for strengthened legislation and law enforcement to ensure fair implementation.

Research by Qilu Evening News found many senior widows and widowers are finding it difficult to remarry due to strong opposition from their children who worry that the new spouse of their father/mother would pose an additional financial burden to the family. An increasing number of seniors have turned to cohabitation or “visiting marriage,” a practice common in the Mosuo minority in Sichuan and Yunnan provinces in which men stay at their partner’s home most nights and leave again each morning. However, since neither cohabitation nor “visiting marriage” is recognized in civil law, it is hard for the “couples” to safeguard their rights and interests in the event of a breakup. Economy & Nation Weekly October 9, 2010

Venturing Inland China National Offshore Oil Corporation (CNOOC) has taken its first step towards the onshore gas development by signing a coal gas agreement valued at 50-100 billion yuan (US$7-14bn) with the Shanxi provincial government in September. The biggest project of its kind in China aims to produce 10 billion cubic meters of gas per year. The company is also designing another coal-gas project in Inner Mongolia and a 900-mile coal-gas pipeline across Inner Mongolia, Shanxi, Hebei and Tianjin. Yet, financial experts have warned that instability in China’s coal market could leave CNOOC waiting a long time to see a return on its investment. NEWSCHINA I December 2010

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Southern Weekend October 15, 2010

Outlook Weekly

September 28, 2010

Sanlian Lifeweek October 8, 2010

House for Land? In response to the central government’s policy that reclaimed farmland can be exchanged with urban developers, many rural governments have urged displaced villagers to move into newly constructed apartments to “re-reclaim” their farmsteads. The policy’s stated aim is to preserve farmland and control the overdevelopment of cities by limiting land use at township level and returning all the profits to farmers. However, rural governments are using the policy to increase revenue by “dismantling rural houses for urban construction.” Experts warn that “blind urbanization” deprives farmers of the right to contract out farmland and could eventually destroy China’s rural economy. Beijing Times October 9, 2010

Choose to be Green As China’s fast urbanization puts increasingly unsustainable pressure on the country’s vanishing ecosystems, cities are now under pressure to disentangle themselves from purely economic interests. Qiu Baoxing, vice minister of Housing and Urban Rural Development, believes the best solution is to build up sustainable “eco-cities,” shifting focus from profit margins onto improving quality of life and redressing environmental imbalances. Some local governments have experimented with these new-type cities, prominent examples being Tianjin’s Eco-Town and the new county seat of earthquake-ravaged Beichuan in Sichuan Province. Yet, Qiu has warned against eco-cities becoming a plaything of urban planners, instead urging municipal governments to divert resources towards making China’s existing metropolises more ecologically responsible. Chinese National Geography

October 11, 2010

Sinopec Enters Brazil China Petroleum and Chemical Corporation (Sinopec), announced on October 9 that they had secured an agreement with Repsol, Brazil’s third biggest petroleum suppler, to purchase a 40 percent stake in Repsol for US$7.1 billion. The deal gives Sinopec an opportunity to explore for petroleum in South America, also funding further development of Repsol’s existing wells, giving China priority access to some of the world’s largest untapped oil reserves. The agreement allows both parties to jointly manage existing assets in Brazil, as well as jointly or separately bid for contracts. Sinopec also acquired Swiss oil explorer Addax last year for US$7.2 billion. NEWSCHINA I December 2010

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Endangered Islands China owns about 6,000 uninhabited islands, many of which are home to unique species. For example, Dazhou Island in Hainan is the sole habitat of swiftlets, a member of the swallow family. However, as nearby villagers have found the island to be a lucrative source of coveted bird’s nests, a luxury foodstuff in China, the number of swiftlets has now dropped to only 40, less than the international biological baseline of 50 that would qualify a group of animals as a viable species, and almost ensuring this rare bird’s extinction. Academic Wei Zhou argues that the Chinese people, as a largely continental ethnic group, have no awareness of protecting island habitats. He told reporters, “they just think these islands are lying idle, so why not use them?”

An Unfinished Fight Gome, China’s biggest electrical goods retailer, held an extraordinary general meeting of shareholders in late September, with four of five proposals put forward by its jailed former chairman Huang Guangyu vetoed, including one which demanded the dismissal of Gome’s present chairman Chen Xiao. Since his imprisonment for a series of economic crimes two years ago, Huang, still holder of a more than 30 percent stake in Gome, has been fighting a losing battle with Chen to retain control of his company. In a recent gambit, Huang threatened to separate over 300 unlisted outlets from the Gome fold and split the company in half, bringing down share prices, a threat which has resonated with shareholders, especially Bain Capital, a Boston-based private equity firm and Gome’s second biggest shareholder, whose recent purchase of Gome stock was strongly opposed by Huang. Soon after the September meeting, Huang announced plans to convene a second extraordinary general meeting of shareholders, allegedly to force through a removal of Chen, who is widely believed to be attempting an insider takeover.


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Leading News Diplomacy

CPC Leader Watches DPRK Parade


China’s Ministry of Land and Resources, the Ministry of Housing and Urban-Rural Development and the Banking Regulatory Commission jointly announced a new package of policies in late September to further cool down the sizzling property market. The policies, including stricter control of land hoarding, a ban on “third home” loans, and a trial reform of the housing tax, were designed to respond to renewed overheating in the housing market. The Chinese government issued an array of policies in April to curb the property market. However, few of the measures have had any real effect. After a short-term “depression,” the market again registered acceleration. According to the National Bureau of Statistics, housing prices in 70 major Chinese cities rose by 0.5 percent in September. In August, 13 major cities saw an average growth of 27 percent in the real estate sales volume. “To stabilize housing prices is a crucial responsibility of the government,” Premier Wen Jiabao claimed at the Da-

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vos Forum held in Tianjin in September, which observers viewed as a sign of a new round of regulations. Since the introduction of the new policies, many local governments have moved to tighten controls. So far, a total of 14 cities, including Shanghai, Beijing, Guangzhou and Shenzhen, have announced a limit or even ban “second homes” for one family. In Guangzhou, for example, the housing market suffered a 65 percent decrease in transaction volume on the first day the local policies were issued. But it is still too early to measure the long-term effect, said analysts.

Senior CPC official Zhou Yongkang attended North Korea’s national parade on October 10 during an official visit. The parade, held to celebrate the 65th anniversary of the founding of the Worker’s Party of Korea (WPK), was also attended by North Korea’s leader Kim Jongil and his youngest son, heir apparent Kim Jong-un. Two days before the parade, Pyongyang had openly confirmed that Kim Jong-un will succeed his father as the country’s next leader. Zhou Yongkang’s visit lasted three days, during which he met with Kim Jong-il four times. Zhou emphasized the friendly cooperative ties between the two countries and on behalf of President Hu Jintao, invited Kim Jong-il and the new North Korean administration to visit China at their convenience. The meeting was one of several highprofile exchanges this year between the two countries. Society

Hainan Flood China’s southernmost island province of Hainan has endured unprecedented rainfall since October 1. By October 18, the heaviest storms since 1961 have affected an estimated 1.65 million people living in 16 cities where over 1,600 villages were drowned. The storm also ruined 67,400 hectares of crops, and destroyed over 2,000 houses, 900 of which entirely collapsed. The direct economic loss is so far totalled at 1.5 billion yuan (US$220m), according to local officials. NEWSCHINA I December 2010

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Face of the Month

Xi Jinping Local government have evacuated more than 200,000 people and appropriated 230 million yuan (US$34m) for agricultural relief. A major portion of funding will be used to subsidize the winter planting of crops. According to the National Meteorological Center (NMC), Typhoon Megi, the most violent this year, is forecast to hit the island by October 22, which will pose an even bigger challenge to the 1,100 local dams, 70 percent of which are already under threat. (See NewsChina, A Changing Threat, August 2010) Technology

China’s Satellite Heads for the Moon China’s second unmanned lunar probe, Chang’e II, blasted off on the Long March 3C rocket from Xichang Satellite Launch Center, Sichuan, on China’s 61th National Day, October 1. As expected, the satellite arrived in a lower lunar orbit about 60 miles above the surface after a 112-hour journey, much shorter than its predecessor Chang’e I. Chang’e II is China’s first lunar probe to enter the earth-moon transfer orbit without orbiting the earth first. Chang’e II’s final target is to enter an orbit nine miles above the moon and take highresolution pictures of the area known as Bay of Rainbows, the proposed landing ground of Chang’e III, the satellite to be used in the second phase of China’s lunar exploration program. Chang’e II will also explore the lunar soil, the compositions of the moon and the spatial environment between the moon and the earth. Economy

China Raises the Rate China’s Central Bank announced a 0.25 percentage point rise in its lending and deposit NEWSCHINA I December 2010

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hina’s Vice President Xi Jinping was appointed the vice-chairman of the Central Military Commission (CMC) on October 18. Hu Jintao, China’s President, took the same post in 1999, and four years later, he was appointed to the presidency. The appointment was made on the last day of the fourday Fifth Plenary Session of the 17th CPC Central Committee, at which China’s next five-year plan was drawn up. Xi, 57, joined the government’s top leadership in 2007 as a member of the Standing Committee of the CPC Political Bureau, and was elected China’s vice president the following year. The son of Xi Zhongxun, China’s vice premier from 1959 to 1962, Xi started his political career as a village head in a remote mountain community in northwestern Shaanxi Province. Xi was appointed a secretary at the General Office of the State Council in 1979 upon graduation from Tsinghua University. In 1982, he was sent to Hebei Province as a CPC official and three years later, he transferred to Fujian, where he accumulated 17 years’ work experience and became known for advocating reform and anti-corruption measures. Xi was promoted to the position of Party secretary of Zhejiang Province at age 49. His successful move to restructure local industry led to his appointment as Party secretary of Shanghai in 2007, his last local office before he entered Zhongnanhai, China’s central government compound. (Source: Southern Weekend, China Daily)

Resume June 1953, born in Shaanxi 1969-1975, sent to Yanchuan county, Shaanxi to study, later elected Party branch secretary. 1975-1979, enrolls at Tsinghua University, begins studies of basic organic synthesis. 1979-1982, appointed secretary of the General Office of State Council and the Central Military Commission (as an officer in active service).

1982-1985, appointed deputy Party secretary and Party secretary of Zhengding county, Hebei. 1985-2002, works as one of the top officials in Xiamen, Ningde and Fuzhou, Fujian Province; appointed Fujian’s deputy Party secretary in 1995, and then the governor of Fujian in 2000. 2002-2007, appointed deputy Party secretary, Party secretary and acting governor of Zhejiang Province March-October 2007, appointed

rates beginning October 20. According to a statement by the People’s Bank of China, the central bank, the benchmark one-year deposit rate will rise from 2.25 to 2.5 percent, and the one-year lending rate will grow from 5.31 to 5.56 percent. The move constitutes the central government’s first rate hikes in three years. Analysts believe the rise indicates increasing concern inside the government over the issue of inflation. According to the national statistics bureau, the CPI, a key gauge of inflation, exceeded 3

Party secretary of Shanghai October 2007-March 2008, becomes a member of the Standing Committee of the Politburo of the CPC Central Committee, secretary of the Secretariat of the CPC Central Committee, and the president of the Party School. March 2008, elected China’s vice president (other positions retained) October, 2010, appointed vice chairman of the Central Military Commission (other positions retained)

percent in both July and August, and recent soaring food prices has pushed the figure up to 3.6 percent in September, the highest in the past 23 months. Zhuang Jian, a senior economist from the Asian Development Bank of China, told the media the hike is a clear signal that the government will gradually withdraw from the economic stimulus designed to respond to the financial crisis in 2008. The hike will also further curb the housing market, according to analysts.


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“On 9/11/01, Bin Laden launched terrorist attacks against the United States. On 9/11/08, the Chinese public found out about melamine-tainted baby milk. Both Bin Laden and melamine are still at large.” Online critic Lian Yue on his blog.

“It is an open secret that the China Football Association served as an ATM for the corrupt. Isn’t it strange to arrest the ATM?” Soccer commentator Li Chengpeng commenting on the detention of the former deputy chairman of the China Football Association Xie Yalong in September for allegedly accepting bribes and engaging in match-fixing.

“Ladyboys are still men. Touching their breasts isn’t such a big deal.” Guangdong official Liang Xiquan, responding to the online circulation of pictures featuring him in a compromising clinch with a ladyboy during an official visit to Thailand.

after three members of a family in Yihuang County, Jiangxi, set themselives on fire to protest against the forced demolition of their home.

“Those who don’t go swimming don’t get drowned. Chinese banks sustained fewer losses during the financial crisis than their global peers simply because they were less internationalized.” President of China Merchants Bank Mai Weihua during a speech at New York University.

“High housing prices, high rents and the high cost of living are the only things stopping a population explosion in big cities.”

Illustration by Wu Shangwen

“National image comes from the people’s An online post by executive hearts. It president of the China Real Estate Association Chen Gui. can’t be His words led to a storm of protest online. man made.” Han Fangming, a vice-chairman of the Chinese People’s Political Consultative Conference responding to questions about his opinion of national PR campaigns.

“Though enacted years ago, the Property Law still cannot protect private homes from bulldozers.” Commentary in the People’s Daily

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“Some people advocate a boycott of Japanese goods. However, 95 percent of Sony products are made in China. Isn’t a boycott kind of stupid?” Former ambassador to France Wu Jianmin in an interview with the People’s Daily.

“Do you know who my father is?” Li Qiming, the son of Hebei police chief Li Gang, when apprehended after killing one classmate and injuring another in a drunken hit-and-run. NEWSCHINA I December 2010

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Born to be Wild Source: Standing more than seven feet tall and characterized by a heavy tread, reddish-brown hair all over the body and “a raucous laugh when devouring a human” – legends of Bigfoot-like wild men inhabiting China’s remotest regions refuse to die despite mass deforestation and the encroachment of human beings on almost all the country’s natural habitats. The purported existence of such beings has become a hot topic online since the Wild Man Research Project in Hubei Province announced an expedition to find a wild man in their rumored habitat, an area of protected virgin forest in Shennongjia. The majority of netizens opposed the idea, voicing concerns about environmental dam-

age, questioning the true purpose behind the manhunt. “Wild men, if they exist, are living their way of life. Why are you disturbing them unless it’s for money and fame?” read one post. “Does it mean the local government is planning its own Avatar-style destruction of a race of people?” asked another. Since anthropologists denied the existence of wild men years ago, many netizens suspect that the project might be a “fraud.” “If they actually find a ‘wild man,’ how do I know it’s not a baboon in disguise?” asked one skeptical netizen. In order to gain support, Wang Shancai, head of the research center, claimed that the project would “help boost the country’s image,” but his appeal to

patriotism only further angered netizens. “Are we so pitiful that we have to depend on wild men for prestige?” asked one post. “There are plenty of ‘wild men’ living on the streets. Why not ‘search’ for them?” suggested another.

Are You There, God? It’s Payday… Source:

Goodwill Hostesses Source: Competition to become a “Goodwill Hostess” for the opening and closing ceremonies of the Guangzhou Asian games is attracting widespread attention after it was announced finalists will begin trials under the guidance of a military drill sergeant. The young, predominately attractive female candidates will spend 15 days in militarystyle training where they will compete for the chance to lead participating delegations NEWSCHINA I December 2010

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as they enter the stadiums during the opening and closing ceremonies of the Games. The training, which will see the current crop of 100 candidates from throughout the country reduced to just 45 finalists, has drawn fierce criticism for its harshness. “Why do such beautiful women need to be tortured? Is this really necessary?” complained one Internet user. However, many web users appeared to overlook the severity of the training, and instead focused on the candidates themselves. “What amazing girls, that drill sergeant is so lucky!” ran one gushing post.

Basketbrawl Source: China’s national men’s basketball team rocked the online community in October, not for winning a game, but for fighting with Brazilian opponents during an international “friendly” exhibition showcase held in Henan. The illtempered match-up stirred not only players but bystanders too, many of whom posted video clips of the fierce fight online. One incident in particular, showing Chinese players launching successive “kung fu” style flying punches, has attracted significant attention, with many internet users viewing the fight as “a dirty shame on the country.” However, many others have come out in support of the national team’s unsporting antics. “We need men with red blood. This is basketball, guys, not a social dance,” ran one post. Others were more dismissive, suggesting that team sports encourage violence. “Collisions occur in NBA matches everyday. What’s the surprise?”


Photos by CFP

Default on the payment of salaries is a persistent problem for Chinese migrant workers. The law can do little to help, and conflicts constantly erupt. However, a group of over

30 migrant workers recently caught attention with a unique way of claiming their back pay. Kneeling on the banks of the Yellow River, they prayed to the River God to deliver their wages on time. Netizens expressed compassion for the workers, while criticizing the authorities for their “dereliction of responsibility.” Although a few netizens disapproved of the workers’ faith in “foolish and useless superstition,” the majority saw the prayer as the “last resort” of desperate people. “It’s better than being harmed by employers or detained by the police during a riot” ran one post. “Now the disadvantaged have nowhere to turn but to the gods!”

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ECONOMY Exchange Rate Dispute

An American Problem? US criticism of China’s currency policy has led to a backlash against the Federal Reserve and accusations of bullying. NewsChina investigates. By Yu Xiaodong


ollowing Japan’s massive selloff of yen in September aimed at weakening the alarming rise of the Japanese currency against the dollar, a string of countries including South Korea, Russia and Brazil have taken steps to drive down the value of their currencies. This complicates the current dispute raging over what the US calls Beijing’s “manipulation” of the value of the Chinese yuan, with Washington courting international support for a united front to press China to allow its currency to increase in value. However, other nations have so far been reluctant to join the crusade.


Accusing China of engendering a “dangerous” cycle of “competitive non-appreciation,” the US Treasury has attempted to play up alleged government manipulation of the yuan, paint-

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ing the State Council and the central bank as belligerents in an inevitable global currency war. China’s current currency policy pegs the yuan to the dollar. After a 21 percent appreciation between 2005 and 2008, the value of the yuan to the dollar has remained relatively stable despite ongoing fluctuations in the currency market. Many in China point to the plummeting value of the US currency as the main reason behind this failure for the yuan to appreciate in value. An editorial in the State-run Huaxia Daily blamed Wall Street for the 2008 financial crisis, arguing that China should take any steps necessary to protect itself from the effects of other countries’ financial irresponsibility. “When the US causes a devastating global flood, they don’t allow other countries to repair the damage.” Economist and author of the 2007 bestseller Currency War Song Hongbing also condemned the Fed’s confrontational stance. “The American government’s policy of ‘quantitative easing’ can be summed up in two words – ‘print money,’” he told NewsChina. Song estimates that by November, quantitative easing will have resulted in an extra US$1 trillion of unsupported capital in the global marketplace, creating excessive liquidity and causing investors to turn to emerging economies in search of higher yields, driving up the value of their currencies in the process. Besides China, a number of other states have voiced concerns that the Fed is devaluing the dollar, the same practice it is accusing Beijing of endorsing. Calling a “weak dollar” the Fed's “most powerful economic weapon,” Nobel prize-winning economist Joseph Stiglitz has claimed that “surplus dollars” are “causing problems all over the world.” South Africa’s Finance Minister

Pravin Gordhan told international media that “current policies in developed countries are leading to significant capital flow into emerging economies. This puts upward pressure on exchange rates.” "The US has printed a lot of money, so now there’s a lot of hot money floating around,” said Peng Fai-Nan, governor of Taiwan’s central bank, in an interview with the BBC. “These short-term injections of capital are disturbing to emerging economies.” Defending Japan’s intervention in the foreign exchange market, an October 10 report in the daily national newspaper Sankei Shimbun also criticized a “loose” US monetary policy being “deployed in a currency war.” Citing the testimony of a UK analyst from the firm Cazenove Capital Management on NBC last year, who admitted that his company had been secretly trading on behalf of the Fed in the financial market, the report hinted at an “alliance” between the Fed and private financial institutions as the main reason behind the fluctuating dollar. “The US may be not interfering directly with exchange rates, but it could manipulate them through stock market trading given the dollar’s status as the world’s dominant reserve currency,” said Professor Cao Honghui from Chinese Academy of Social Sciences. “Printing money can stave off bankruptcy, but it won’t boost employment,” commented economist Zhu Daming. “Now the Obama

“The American government’s policy of ‘quantitative easing’can be summed up in two words – ‘print money.’” NEWSCHINA I December 2010

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administration is trying to solve its problems by offloading its economic woes onto other countries.” During a visit to Europe in early October, Chinese Premier Wen Jiabao dismissed any drastic appreciation in the yuan on the grounds that it would “cause unemployment and social unrest in China.” Ministry of Foreign Affairs spokesperson Yao Jian said in a statement on October 15 that “China should not be the scapegoat for other countries’ domestic problems.”

Addressing Imbalance

One major concern for the Fed is the huge US trade deficit with China, which is believed to have caused widespread unemployment. Some analysts argue the Obama administration’s target of doubling exports in five years as well as boosting employment are impossible through simply increasing competitiveness, and that the policy effectively demands as much as a 30 percent depreciation in the value of the dollar. Economists have warned against oversimplifying the solution to the US trade deficit, instead urging domestic alternatives. According to official statistics released by the General Customs Administration of China (GCAC), the US trade deficit with China increased by 21.6 percent year-on-year between

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2005 and 2008. In the same time period, the yuan appreciated by more than 21 percent against the dollar. In 2009, when the dollar-yuan exchange rate remained stable, the US trade deficit decreased by 16.1 percent. The GCAC points to factors other than currency valuation as the root cause of the deficit. An EU trade official told NewsChina on condition of anonymity that the EU believes China’s economic growth is more important to boosting bilateral trade than the appreciation of the yuan. Despite an allegedly undervalued yuan, EU’s exports to China have increased by 40 percent in the first 10 months of this year, while imports have increased by about 10 percent. He estimated that EU-China export revenue in 2010 will exceed €100 billion (US$140bn), up from €81 billion (US$113bn) last year, while import revenue from China will be about €230 billion (US$323bn), up from €215 billion (US$300bn) last year, narrowing the EU trade deficit with China. It may also explain the reluctance of the European Union to stand alongside the US in economic talks with China in early October. In an October 9 statement, the IMF refrained from specifically calling on China or other nations to change their currency policies, instead

Illustration by Wu Shangwen

calling for more research into economic imbalances. The US also decided to delay a report to Congress on China’s currency policy, citing that this was due to the yuan’s rate of appreciation reaching more than 1 percent per month. However, the threat of a global currency war has by no means passed. With a weakening US currency, despite a 3 percent appreciation of the yuan against the dollar since June, the Chinese curA stronger rency has decreased in value yuan would assist China by almost 10 percent against in its move the euro. It is expected that away from an the US will use this fact to export-oriented economy to an rally support from EU and economy based other national leaders to in- on domestic crease the pressure on China consumption.” during the G20 summit Commentary, page 72 later in the year. Many Chinese analysts have warned that a short-term appreciation in the value of the yuan exceeding 5 percent would threaten the country’s overall economic health. Zhou Xiaochuan, governor of China’s central bank, rejected the idea of “shock therapy” for the yuan, instead supporting the central government’s policy of “gradual reform.” It is widely speculated that China will restrict appreciation within 5-7 percent in 2010, far short of the preferred US target of 20 percent. However, a partnership seen as crucial to lifting the world out of recession may now lead it back into economic crisis as both the US and China continue to grapple over their currencies. 


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Comrades, In a bid to keep our country’s population below 1.2 billion by the end of this century, the State Council is calling on countrymen to limit births to one child per couple. Since the founding of the New China, the national birth rate has lacked proper regulation, and consequently our population has outpaced development. If we do not advocate the restriction of one child per couple our country’s total population will reach 1.3 billion in twenty years’ time. An accelerating birth rate reduces the accumulation of national wealth. A decelerating birth rate increases it. Since 1979, millions of young couples have responded to the Party’s call by voluntarily having only one child. In 1979 alone, 10 million fewer people were born than in 1970. We will not face the challenge of an aging population in this century. We can easily anticipate and prevent this phenomenon. By the start of the 21st century, our national labor force will see a year-on-year increase of 10 million people. We do not need to worry about labor shortages. Females can participate equally in labor, excelling in certain professions as well as in domestic labor. People in the New China will undoubtedly raise a daughter with as much devotion as a son. If a young woman gives birth at 20, there will be five generations in one hundred years’ time. If she waits until she is 25, there will be only four. Having children later is significant to reducing the birth rate. Single-child families will enjoy favorable healthcare, employment, education and housing. We will train skilled surgeons in sterilization procedures to reduce the number of children born with disabilities, and increase the quality of contraceptive devices in order to meet the needs of the people. Contraception is the best form of birth control, and the people must be free to choose their preferred method. The CPC Central Committee demands that all Party members, Youth League members and cadres at all levels be concerned with the future of our country and to lead by example. Every comrade should help the people, without coercion or subversion of the law, to carry out the appeal of the State Council. CPC Central Committee September 25, 1980 (Extract from the CPC Central Committee's open letter on the one child policy)

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COVER STORY Family Planning Policy

Birth of the One Child Policy Three decades have passed since the implementation of China’s controversial “one child per couple” policy. With ardent supporters and detractors both inside and outside of the country, we examine its history and ongoing legacy.

Photo by fotoe/ Illustration on previous page from “Standard Family” by Wang Jinsong

By Xie Ying and Yang Min

A member of the family planning propaganda team gives a speech to villagers, Cangnan county, Zhejiang, August 1983


n late September, commemorative activities were held across China to mark the 30th anniversary of the country’s one child policy, which, according to the government, officially began with an open letter issued by the Central Committee of the Communist Party of China on September 25, 1980. The letter detailed population pressure on limited natural resources and economic development, and called for a policy of “one


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child per couple” in order to “keep the population below 1.2 billion at the end of the 20th century.” Following the letter, local branches of government throughout the country began to draft an array of regional rules and regulations intended to implement a rigid onechild rule. Two years later, it was made a long-term State policy, and included in the then newly revised Constitution. The policy,

unprecedented in its size and scale, would come to impact the life of every Chinese citizen, and led to a debate that to this day shows little sign of dissipating.

A Difficult Decision

Given the sensitivity and complexity of the issue, it was certainly not easy for the central government to pass legislation leading to the implementation of a one-child policy. AcNEWSCHINA I December 2010

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cording to Tian Xueyuan, credited as one of the policy’s key architects and author of the book Sixty Years of China’s Population Policies, then central government held no less than five seperate symposiums before finally issuing the open letter, with each one ending acrimoniously, as arguments between participating academics raged across the floor. In effect, those early contentions were never truly resolved. As Susan Greenhalgh, a professor at the University of California at Irvine said in her book Just One Child, it is almost impossible to find anyone whose opinion on the subject remains neutral. Greenhalgh interviewed almost all of the major actors involved in producing China’s population policy over a span of more than 20 years. There are staunch supporters and persistent opponents, and according to Greenhalgh, divisions among top leaders and academics are by no means rare.

Alarming Statistics

During a national symposium held in Chengdu in December 1979, Song Jian, then a military expert from the defense ministry and Tian Xueyuan, a researcher with the Chinese Academy of Social Sciences, alongside two other academics, presented a series of population projections for the next 100 years. Their verdict was stark. Unless China took measures to control its birth rate, the population would reach an estimated four billion by 2050. This was further compounded by evidence that suggested that even if measures were implemented to reduce the average family size to just two children per family, the population would continue to grow until it reached an estimated 1.5 billion by 2050. “If we do not control the birth rate from this point on, people will be unable to gain a toe-hold on land, and instead will be forced into the sea,” explained Song Jian. Although, earlier research had already begun to link the size of the country’s population and its poorly developed economy, Song Jian’s frightening vision of a future unrestrained by population control helped install an inexorable connection between population and economy in policymakers’ minds. Yet according to Greenhalgh, while China’s oversized population no doubt contributed to the country’s poor economic performance, the link between population and economy proved to be an oversimplified analysis, and NEWSCHINA I December 2010

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led to other factors, such as the country’s political, cultural and economic systems, being removed from further scrutiny. China’s family planning policy was formulated in a specific historical and political context. With the shadow of the Cultural Revolution (1966-76) still looming large, the government was understandably eager to recover from the era’s political turmoil and return the country to its feet. Song’s report provided a strong theoretical basis for decision makers concerned by the difficulties presented by China’s growing population. But as Greenhalgh has since pointed out, senior Party leaders such as Chen Yun and Li Xiannian had already explicitly expressed their support of a strict one child policy prior to Song’s presentation at the 1979 symposium. Yet aided by Song’s unsettling predictions, supporters of a one child policy eventually prevailed, resulting in the open letter, which called for the members of the Communist Party and the Youth League to take the lead in birth control, in the hope that the whole country would follow their example. During the formative years of the country’s population control policy, Liang Zhongtang, then a teacher at the Shanxi Provincial Party School, was the only voice to explicitly challenge the proposal to institute a strict nationwide one-child rule. In December 1979, he seized the chance at the Chengdu symposium to relay the “concerns of the voiceless” – farmers, the lives of whom would be impacted to a much greater extent than urban residents by the proposed plans. A grassroots level official, Liang alleged that at least two children per family were crucial to maintain the wellbeing and lasting survival of China’s rural communities. Liang was the first to predict adverse side effects stemming from the policy’s nationwide implementation, correctly identifying problems such as an aging population and possible labor shortages. He also coined the now popular term, “the 4:2:1 family problem,” used to describe two working adults supporting four elderly parents and one child. Liang went on to become one of China’s few outspoken public critics of the policy. For years he strongly advocated a more moderate policy of population control, while in

“The original one child policy was met with strong opposition, and so the government chose to announce the policy with an open letter rather than a traditional official declaration.”

recent years he has taken his opposition even further, advocating a lift on all forms of fertility control. “The original one child policy was met with strong opposition, and so the government chose to announce the policy with an open letter rather than a traditional official declaration,” Zhang Mincai, a then member of the national family planning team told NewsChina.

Tightened Control

Due to a birth stimulus policy modeled on that of the former Soviet Union, and aimed at bolstering the labor force, China’s population, according to the first national census in 1954, had exceeded 600 million, nearly 150 million more than that at the founding of New China in 1949. Such rapid growth shocked government leaders, including Zhou Enlai and Deng Xiaoping. They repeatedly emphasized the importance of birth control at different public occasions, and ordered all health authorities to loosen controls on contraception. However, their focus was soon diverted by the Great Leap Forward (1958-61), a social and economic campaign aimed at using China’s vast population to rapidly transform the country from an agrarian economy into a modern communist society. With the slogan “strength in numbers,” the negative impact of China’s population swell was quickly covered up. Although the government was still publishing and delivering promotional material that advanced the benefits of birth control, no official regulations or rules were implemented. Family planning finally appeared on ➥


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the political agenda as China met with a second baby boom beginning at the end of the country’s three-year famine (1959-1961). National statistics revealed that China’s population had grown by a further 150 million, rising to over 800 million by early 1970, with the average family now consisting of two parents and five children. In response, the government set up a series of local birth control agencies throughout the country, appealing to the public to reduce the number of children per family to two, as well as promoting late marriage, late birth, and at least a three-year gap between the first and second child. However, China’s economic development benefited little from family planning measures. By 1978, China was home to an estimated 250 million people living under the poverty line. Despite being ranked 15th in terms of national GDP in the world, China’s per capita GDP ranked second to last, and constituted only two thirds that of neighboring India. Zhang Mincai recalled how during the late 1970s elementary schools in Tianjin were too small to accommodate the area’s growing number of pupils, leading to children taking daily classes in turn, and families in the northern Yimeng mountains were so poor that they used rocks as pillows. “The government was determined to change China’s fate, and so they advanced the slogan, ‘develop the economy and decrease the population,’” explained Zhang. “We once said ‘one child at best, two at most,’ but now we say ‘one child only.’ This is a strategic change in our population development,” Chen Muhua, then deputy premier and head of the family planning team of the State Council, claimed at a national family planning conference at the end of 1978. It was a clear signal to tighten the nation’s birth control policy. According to Liang Zhongtang, China had piloted the one child policy in several regions prior to 1980, and the open letter helped push the policy throughout the country.

Sharp Conflict

“Since the announcement of the open letter, 95 percent of urban families and 90 percent of rural families were required to have one child only,” Zhai Zhenwu, a professor of so-


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Photo by ic


ciology and population at Renmin University told NewsChina. “In a country where people, especially those in rural areas, believe more children bring more happiness, and view sons as pillars of the family, the compulsory one child policy naturally aroused strong feelings of resentment,” explained Zhai.

“Any woman who was bearing an ‘illegal’ child would be forced into an abortion, no matter how long she had been pregnant,” Gao Zhihui, a 67-year-old resident of Shicao village in the eastern suburb of Beijing told NewsChina. Such conflict, according to Zhai, became fiercer after rural households were allowed NEWSCHINA I December 2010

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to self-contract farmland for private production (an early element of China’s reform and opening-up). “As rural households were entitled to engage in independent production, ablebodied laborers were of higher importance, and enlarging the family became a natural demand in order to earn more money,” said NEWSCHINA I December 2010

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Zhai. His idea was shared by Gao Zhihui. “We live on a farm, but how could a family manage the farm work if the couple had only one daughter?” she asked. Tian Xueyuan once told the media that the one child policy was definitely good for economic development, but not really for

rural families, since at that time, the cost of supporting one more child was much lower than the potential reward – more laborers and higher insurance for elderly family members. “Yet, in that special historic period, the one child policy was the only way to reduce population growth,” explained Tian. 


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COVER STORY Family Planning Policy

Enduring Memories The strict enforcement of I the one child policy has left an indelible stamp upon the lives of countless families throughout the country. By Wang Yan

t is harvest season for farmers in Wangpaizhou in central China’s Hunan Province. Surrounded by cotton and paddy fields and hidden among verdant bamboo groves and orange trees, the village appears the epitome of the rural idyll. Yet, this apparent peace was shattered by the introduction of a rigid family planning policy in the early 1980s.

Child by Chance

Wang Kaizheng, 56, and his wife Li Sanchun, 57, live with their three-year-old granddaughter Qiqi in a two-story brick house in the village. The couple has three children, all of whom now work outside of their home village. Their youngest son Wang Jihui was born in

Rewards One-child couples are eligible for numerous State benefits. Generally, each eligible couple receives 10 yuan (US$1.5) per month, or a one-off payment of 1,500 yuan (US$220). Specific rewards vary depending on locality. Beijing l Couples are eligible to receive remuneration to cover their child’s pre-school fees and medical expenses until the child reaches the age of 18. l Each spouse is eligible to receive a further “bonus”of 1,000 yuan (US$147). l Couples in rural areas are provided with preferential endowment insurance, housing, and official assistance. Sichuan l Families in rural areas receive preferential treatment when applying for housing. l Couples in State-owned companies may enjoy an increase of up to five percent on the value of their pensions. Those employed in private enterprises may also enjoy incremental increases in pension, with the specific amount based on detailed regulations.


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Guangxi l Mothers may apply for six to12 months’ maternity leave on up to 80 percent of their regular salary. Hainan l Couples receive a minimum of 30 yuan per month (US$4.4) until their child reaches the age of 18. l Couples in rural areas provided with a reduction in their child’s tuition fees. l Rural students from one-child families may be awarded extra points in admission tests for high schools, vocational schools, colleges and universities.

1982, a period that coincided with the rigorous enforcement of the then newly formulated family planning policy. “It was a tough and miserable experience for us to have him born at that time,” recalled Wang, a wrinkle-faced and compact man with short grey hair. Before having their third child, Wang worked as a mechanic in a farming equipment factory in a nearby town, while his wife worked as a teacher in a rural elementary school. After they had their second child in the late 1970s, the local family planning policy dictated that Wang’s wife, Li Sanchun, undergo mandatory tubal ligation surgery, due to her already fulfilling (even exceeding) her childbirth quota. However the operation was unsuccessful, and in 1982 Li became

Punishments (Jiangxi Province) Couples who bear out-of-plan children receive the following additional fines and punishments: l Urban couples employed by the State

receive a 10 to 20 percent deduction from their monthly salary for a period of ten years, prevented from gaining promotion, rewards, bonuses, subsides for the poor, or increases in housing allocation for a period of five years, and receive employment penalties, including in extreme cases, dismissal.

Special Policies for Ethnic Minorities Xinjiang l Urban Uygur couples: 2 children l Rural Uygur couples: 3 children

both spouses hold a non-urban residency and engage in agriculture or animal husbandry, they may have a third child.

Ningxia l Rural Hui couples: 2 children

Other l Daur, Ewenki, Oroqen couples: 3 children. l Couples of other ethnic minorities with a total population of below 10 million may have two children each.

Inner Mongolia l Mongolian couples: 2 to 3 children. Note: if both children are daughters, and

Rural couples are prevented from working in State-owned industries, and are ineligible to transfer their non-agriculture residency (hukou) for five years (effectively preventing couples from relocating to find gainful employment elsewhere). They may be excluded from future housing site assignments and deprived of numerous welfare benefits. l

Couples in private enterprises are subject to additional fines. l

Couples who bear more than one out-of-plan child are subject to additional fines, up to double the value of the previous fine. l

Couples who have a second child before the required interval between births, or give a birth prior to the required age, or violate other family planning policies, are subject to additional fines. Those employed by the State are stripped of their salary during maternity leave, and deprived of birth related welfare. l

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Photo by Wang Yan

pregnant again. When the pregnancy was uncovered by the village’s director of women’s affairs, Li was forced to have an abortion. For the past three decades, the family planning policy has been forcefully implemented in all parts of the country. If a woman is not in possession of the required childbirth permit (or quota) from the relevant agencies, the pregnancy will be regarded as “illegal,” and an ­abortion required. Despite government laws forbidding forced abortions, many rural cadres were ruthless and inhumane in their enforcement of the policy, due mainly to the birth control rate’s position as a key factor in their work performance evaluation. Three days before their scheduled journey to the county hospital for the operation, Li unexpectedly gave birth to a boy at home with the help of a midwife. The couple named their son Jihui, meaning “chance” or “opportunity” in Chinese. Despite the slightly premature birth and their willingness to cooperate with the authorities, the couple was fined 3,500 yuan (US$500), equivalent to the annual income of an average urban household at the time. Yet despite the fine, and the fact that both Li and Wang later lost their jobs, the couple was overcome with happiness. In the following years, Wang became selfemployed, earning money through a succession of odd jobs in other cities, while Li dedicated herself to taking care of her three children and their small plot of farmland. In the late 1990s, Li joined her husband as a migrant worker, padding quilts in big cities including Changsha and Beijing. Now that all three of their children have graduated from school and have begun working, the couple has returned to their small patch of farmland, where they now cultivate 5 mu (0.83 acres) of arable cotton, giving them an average annual income of 10,000 yuan (US$1,430). However, this year, due to a long spell of wet weather, the output has dropped and the cotton quality downgraded. “In springtime we need to purchase seeds, fertilizers and other stuff for the plowing sea-

Wang Kaizheng and his wife Li Sanchun, have three children, now look after their granddaughter Qiqi.

son, so, deducting the costs, generally we can only make less than 7,000 yuan (US$1000) through farming every year. The price of certain commodities here are no cheaper than in the city. In addition, unlike urban residents, we do not have any social welfare. The life of Chinese farmers, such as ours, is really difficult,” explained Wang. “But we feel we are fortunate to have three children. With financial help from them, we can make our life better.” As he was talking, his small granddaughter snuggled into his arms. The couple looked at her affectionately, their faces lighting up.

Ongoing Changes

There are around 200 households and a total of over 1,000 people in the Wang family’s village.

Zhou Jiumei, 63, has been working as the village’s director of women’s affairs since 1982. According to Zhou, although the family planning policy was introduced in the late 1970s, its enforcement was only gradually strengthened. The toughest times came during the late 1980s and early 1990s when compulsory abortions and other extreme measures were taken to punish those who violated the policy, Zhou recalled. “The punishments meted out to those families who did not fall in line with the policy were very harsh or unimaginably severe in some cases,” she said. According to Zhou, in 1992 alone, dozens of forced abortions were performed on villagers. In the early stages of pregnancy, “illegally pregnant” women wore loosely fitting or oversized clothes so as to cover ➥


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COVER STORY up any outward signs. Once the pregnancy was discovered, Zhou had to accompany them to the hospital, ensuring that they underwent the required abortion, explained Zhou. It remains a painful memory for the former director too, witnessing the suffering of those miserable pregnant women, and having to listen to the cries of their heartbroken relatives. “There were many bloody fights between families and local government employees who were dispatched to take the pregnant woman to the hospital.” Since the late 1990s, more and more young people have left their villages, to seek jobs in cities, posing a new set of challenges to local governments charged with keeping tight controls on the local birthrate. Thus gradually fewer and fewer forced abortions have been performed. Yet, heavy fines remain in place. The fine for “illegal childbirth” has since been renamed by the government as a “social upbringing fee” for the “illegally born child.” In Wangpaizhou the fee is 17,000 yuan (US$2,430), still a huge sum for a rural household. During her conversation with NewsChina, Zhou time and time again emphasized that during her almost 30-year tenure as a grassroots family planning worker, she often failed to meet the birth control target. “Other villages could meet the annual birth quota, while our village lagged behind in this regard because we had one or two ‘illegally born children’ every year.” Despite Zhou’s so-called “less strict” approach, the population of Wangpaizhou village has remained relatively static for the last 30 years. Zhou told NewsChina, “The present number of registered villagers including those young people who have gone out to work in other places is 1,060, while the number in the 1980s was 1,100.”

According to official figures, by the end of 2005, there were over 500,000 grassrootslevel employees working to implement family planning policies across the country. Over the last few years, however, changes have occurred in their day-to-day duties. In the 1980s and 1990s, family planning slogans such as “If you do not abide by the family planning policy, your family will come to a bad end” or “It’s better to have 10 more tombs than to have one more person” could be seen everywhere, especially in rural villages. Now even in the most remote rural areas, such menacingly worded slogans are gone. In a bid to address the needs of the rural population, the country has allowed local governments some flexibility in the enforcement of the birth control policy. “Since 2008, a renewed provincial family planning policy has allowed couples in rural areas to have a second child if their first child is a girl,” Zhou told NewsChina. “However, the couple is still required to obtain a birth permit for their second child, otherwise the child is regarded as illegal.” “But it is still unfair in the eyes of those who have a boy first. They are asking, why can’t they have a second daughter? People are still not satisfied, so the work is never easy to handle,” she said. Villager Wang Kaizheng’s youngest son and daughter-in-law are now working in Beijing, selling household items such as curtains and carpets. According to Wang, they could have a second child according to the modified family planning policy. “My wife and I hope they can have one more child soon so we can help them raise the two children at the same time,” Wang told NewsChina. “But they said that considering the financial burden, they might not have their second child before they have ‘made it.’” 

China’s Family Planning History 1957




Mao Zedong publicly proposes birth control in densely populated areas. State newspaper the People’s Daily issues a written speech by the then well-known economist Ma Yinchun (1882-1982), calling for controls on the population growth.

The Central Committee of CPC and the State Council issues Instructions on Encouraging Planned Birth (officially translated into family planning) as China sees a compensatory birth peak in wake of a three-year famine (1960-1962).

The second national population census shows the total population is reaching 700 million. The government sets up family planning committees throughout the country with a focus on reducing the natural growth rate within urban areas.

The State incorporates population control into the national economic planning, requiring a gradual reduction in the natural growth of the population during the fourth five-year plan.

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Family Planning Policy

What’ s Next? A secret 25-year “two-child” project may yet inspire a solution to the unintended consequences of the one child policy. By Zheng Zhonghai


iang Zhongtang, a demographer with the Shanghai Academy of Social Sciences, remains largely unknown outside of a small circle of family-planning specialists. This, however, may be about to change. For the last 25 years, Liang has overseen a special pilot project that allows families in a rural county in the northwestern province of Shanxi to have two children separated by a six-year gap. The county’s population indictors – gender ratio at birth, age structure and growth rate – are all better than the national average. Yet despite its success, publicity surrounding the project has been deliberately hushed up. The origins of the pilot project can be traced back to 1984, when young Liang lobbied Beijing for the opportunity to test what he termed his “two-child-plus-spacing” policy, in order to determine its long-term viability. Fortunately for Liang, the then Party chief Hu Yaobang gave it the nod, adding one crucial condition – no publicity. The relative anonymity of the project remains very much in evidence today, flick through any one of the county’s official pamphlets designed to showcase the local family planning bureau’s various achievements, and there will be scant mention of Liang’s pilot project. The authorization of the project coincided with the government’s quiet transition from the rigid one child policy of 1980 to the more flexible population control policy of the latter part of the decade.

“Although the number of children per woman has fallen, much of that decline appears to be due to rapid socioeconomic development which has lowered childbearing desires.”

style approach, just like the national population control policy. Now after 25 years, the effects of the separate policy have become apparent. According to local family planning bureau chief Gao Xiang, the county’s population has remained steady at one percent of the province’s total since 1985. Its gender ratio at birth between male and female fluctuates within the natural norm of 103-107. In contrast, the national average rose from 108 in 1982 to 120 in 2009, according to statistics released by the National Bureau of Statistics. Yicheng’s fertility rate is below 9 per 1,000; the national average is 12 per 1,000. In addition, and perhaps most importantly, the county faces a less acute aging problem. In 2005 those aged over 65 accounted for just 9.7 percent of its population, compared with the nationwide figure of 12 percent. Many choose to have only one child ➥





The central government establishes a family planning policy that encourages each couple to have one child preferably and two at most.

One child policy begins nationwide as the Central Committee of the CPC sends the open letter to all the Party and Communist Youth League members, encouraging them to have one child only.

The national family planning commission is set up and becomes a part of the State Council.

The Central Committee of CPC issues detailed instructions on family planning which encourage late marriage and later, safer and fewer births. The 12th National Congress of the CPC defines family planning as a basic State policy. A new revision to the Constitution stipulates that “couples are obliged to participate in family planning.”

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After several failed attempts to rally willing participants, Liang found an enthusiastic partner – Wu Boqin, Party secretary of Yicheng county. Set against the backdrop of popular discontent with the government’s family planning policy, the two men both agreed that it would be very difficult to enforce a tough population control policy in rural areas. Unsurprisingly, their decision to implement a separate policy was well received by local residents. Before the pilot project was launched in 1985, couples in Yicheng, like elsewhere in the country, were allowed to have only one child. But the strict one-child policy was at odds with the reality faced by the majority of China’s rural inhabitants. “Farmers needed two or even more children in order to sufficiently support their family,” explained Che Yuelian, a recently retired former family planning propagandist in Hunan Province, during an interview with the Southern Weekend newspaper. Yicheng met the criteria that Liang deemed crucial for the experiment – a typical rural county with an average income. There are, however, specific rules the county residents have to follow. Couples must marry three years later than the age required by the national law, and have the second child six years after the first birth. Third births are strongly discouraged. However, Liang said he later realized that his “marry late, give birth late and have long intervals between children” experiment remained a fundamentally planned-economy-

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COVER STORY even though they are allowed to have a second. Local officials asserted that changing family values and increasing economic pressures have affected public mindset. “Raising a child is simply way too expensive,” said Wu Baotang, a senior family planning official.

Undesirable Consequences

In contrast to Yicheng residents, Chinese couples are subject to what researchers and officials simply refer to as a “one-and-a-half child policy,” adjusted from the one child rule in 1980. The official term today is the more neutral sounding, “family planning policy.” Immense financial and political costs associated with the enforcement of a tough population policy became apparent as soon as it was implemented in 1980. Coercion, forceful measures and heavy fines undoubtedly alienated the public from the government, acting to exacerbate pre-existing tensions. Although the government outlawed any forceful enforcement of the law in 2002, violent incidents continue to occur today. Beginning in the mid-1980s, parents in urban areas, or more than one-third of the population, have been required to have only one child, while couples in most rural areas – accounting for about half of the Chinese population as a whole – have been permitted to have a second child if their first is a girl, or has a physical disability or mental illness. Moreover, all ethnic minorities are usually allowed to have two children in urban areas, or three or even four in more rural areas. In the years following these shifts, local governments were also granted a slight increase in flexibility when administering the policy. According to senior officials within the State Population and Family Planning Commission, China’s fertility control policy is believed to have helped reduce population growth within the country by as much as 400 million over the past 30 years.

“Although the number of children per woman has fallen from around 2.7 in the late 1970s to 1.55 today, much of that decline appears to be due to rapid socioeconomic development which has lowered the desire for children to the point that today large and growing numbers of couples, rural as well as urban, want only one,” commented Susan Greenhalgh, a professor with the University of California at Irvine, in her book Just One Child. The alleged success of the birth control policy comes with additional, arguably disastrous if not unanticipated, demographic, social and political consequences. The policy contributes to a distorted age structure, with a growing proportion of elderly, a shrinking workforce, a high gender imbalance with males outnumbering females, female infanticide and selective abortion, as well as a future social safety net stigma. Together, these forces augur an aging and constrained nation within just one generation. According to a report by the State Population and Family Planning Commission, there will be 30 million more men than women in 2020, potentially leading to an increase in an array of socially harmful phenomena, such as the kidnapping and trafficking of women, sexual crime and violence. Many warn China may get old before it becomes rich enough to support its aging population. The rapid drop in birth rate, coupled with a rise in life expectancy, has led to an increasing proportion of elderly citizens. The percentage of those over the age of 60 accounted for 10 percent of the total population in 2000, a figure believed to constitute an aging society. The State Population and Family Planning Commission estimates the number of elderly citizens will reach 280 million by 2025, or about 18.4 percent of the total population, with projections of further rises taking the figure as high as 400 million in 2050, accounting for 30 per cent of the total popula-

tion. A key factor likely to further aggravate the situation is China’s shrinking labor force, which threatens to increase labor costs, slow or even reverse economic growth and increase immigration pressures. By 2020, the working population aged between 20 and 24 is expected to drop by as much as 50 percent, said demographic expert Wang Feng in an interview with Canadian newspaper The Star. Wang, a sociology professor with the University of California at Irvine, has studied China’s population policy for more than a decade. The UN forecasts that China’s working-age population, defined as those aged 15 to 59 years of age, will begin to decline after 2015. With a social safety net yet to develop, adult children are expected to be the primary providers of support and care for their retired parents, as well as their own children. In what has come to be known as the “4:2:1 problem,” a term coined 30 years ago by Liang, the heavy financial and psychological burden makes these families vulnerable to all manner of accidents. Many firmly believe the Chinese government must now begin to address these adverse consequences, or face serious new policy dilemmas.


As the country begins to reexamine the effects of its unprecedented population policy, decision makers and academics remain deeply divided on its future and possible alternatives. Some insist the current policy should not be loosened for fear of a population rebound. Others argued the opposite, insisting the current policy be terminated immediately. Most local policy enforcers remain steadfast in their defense of the policy. During an interview in late September with, Li Wanchen, director of the Hunan Provincial Population and Family Planning Commis-





The Central Committee of CPC modifies family planning polices, allowing rural couples who have only one daughter to have a second child.

Deng Xiaoping explains the idea of family planning in his meeting with the former Japanese premier Takeo Fukuda, saying “Birth control is China’s crucial strategic decision … Any foreigners who oppose it are attempting to keep China in poverty.”

The Central Committee of CPC and the State Council issue a document, urging the explicit implementation of family planning and calling for a “nationwide mobilization.”

The national family planning commission issues seven “don’ts” outlawing several harsh or illegal birth control measures, particularly in rural areas.

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NEWSCHINA I December 2010

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Photo by CFP

sion again emphasized the necessity of the 30year family planning policy by declaring that thanks to the policy, Hunan Province alone has avoided an increase of 36 million people. He also reiterated that the family planning policy should not be loosened, and if a two children policy is adopted, the whole nation may face a population increase of 200 million, thus threatening the nation’s economic and social stability. However, many population researchers favor a “two-child policy,” citing Yicheng as an example of a politically viable and effectively enforceable solution. As early as 2004, Gu Baochang, a professor with Renmin University of China, proposed a gradual transition to a “two-child” policy, arguing it would not result in runway population boom. “A two-child policy meets most people’s wishes,” he said. Tian Xueyuan, widely regarded as one of

the key architects of the one child policy, suggested in an article published last December in the People’s Daily that if one half of a couple is an only child, the couple should be allowed to have two children. The authorities may be considering a “twochild” alternative of some sort. According to a recent AFP report, He Yafu, an expert who in Chinese demographic patterns said authorities plan to launch pilot projects in five provinces – Heilongjiang, Jilin and Liaoning in the northeast, Jiangsu and Zhejiang in the east – to let couples of whom one is an only child to have two children as of next year. “Over the next five years or so it will spread to the whole of China,” he told AFP. Official confirmation of the project has yet to be released. The current controversial population policy was designed from the outset to be a temporary one generation policy. In September

1980, authorities vowed in the open letter issued by the Communist Party of China’s Central Committee to “adopt a different population policy 30 years hence, on condition that the current demographic problems have been significantly reduced.” What authorities deemed pressing demographic problems at that time were primarily centered on an ever-increasing population; today the country is faced with a different set of demographic problems that center on a skewed population pyramid, revealing both an inverted age structure, and a dangerously imbalanced male to female ratio. Together, these problems combine to result in an imminent economic, political and societal crisis. The situation has fundamentally changed, and now calls for no small amount of political courage and wisdom in order to overcome the great challenges ahead. 






China’s population of seniors over 60 years of age amounts to 10 percent of the population total, marking China’s transition to an aging society. The central government issues a document, shifting the focus of family planning to low birth rates and “improved birth quality.”

The Population and Family Planning Law comes into effect.

The National Family Planning Commission is renamed the National Population and Family Planning Commission with a range of new functions, such as strategic research on population development, population planning and development of reproductive health industry, etc.

The vice president of China Family Planning Association and China Population Association Li Honggui reveals that China has empowered provincial NPCs to decide whether to lift the ban on a second child.

Family planning regulations targeting the floating population comes into effect.

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l l l l

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POLITICS Online Politics

Progress in Dilemma

A new government-led initiative is encouraging the public to engage in direct dialogue with the country’s top leaders by posting messages online. But can the introduction of internet message boards really facilitate meaningful communication? By Wang Weibo and Wang Xue

A One-Way Channel?

However, as enthusiastic Internet users continued to inundate top officials and central government departments with messages, the dialogue had become distinctly one way, with officials yet to send out a single response. Although the CPC website pledged to become a “communication platform between the central government and the public,” progress appears to have slowed. An official from the CPC website told media that the CPC Central Committee is responsible for selecting and forward-


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ing messages and public comments to the top leaders. Yet, since the launch of the service, the website has refused to answer media inquiries. Many wonder whether the service was initiated by the top leadership, and whether the leaders will actually see the messages. On September 15, one week after the launch of the service, “Zhongnanhai Express” was removed from its previously eyecatching place on the Party’s homepage cpc., and was instead relocated to a relatively obscure section of the site entitled, “Reporting on Central Leaders.” When our reporter logged onto the service again on September 21, information on the number of comments was no longer publicly available, while comments and messages left by previous users were restricted to a small number of “selected comments.” The website’s customer service staff told NewsChina that they were still experimenting with Zhongnanhai Express, and future readjustments were likely. However, as a result, many users have since criticized the service for its apparent failure to live up to its claims, with many labeling the so-called interactive platform “a one-way vehicle.” “Reply or not to reply? It’s an awkward situation,” one observer, speaking on the condition of anonymity, described the dilemma faced by the CPC website. “On the one hand, it’s unrealistic for top leaders to answer all the messages pouring in, a large volume of which are over petty matters, while on the other hand, offering no reply runs counter to the central authorities’ commitment to public accountability.”

Extended Experiments

Surprising as it is, the Zhongnanhai Ex-

press is apparently an extension of the government’s ongoing experiment promoting connections between itself and the public, conducted chiefly by, itself managed by the official website of the People’s Daily, China’s top State newspaper. The earliest experiment began in 2006, when launched a service entitled “Message Board for Local Leaders” across its local affiliate websites. According to Yang Jia, who was in charge of the service, it was based on the personal homepages of several local provincial officials, which included personal resumes and a space for Internet users’ comments. Yang said that the first comment showed up in early 2005, and soon led to more. The website then decided to upgrade these web pages to “message boards for local leaders.” However, these message boards attracted few comments, and were strictly one-way, with officials rarely responding to messages. This all changed on June 20, 2008, when President Hu Jintao visited cn and talked live with netizens. Within days, the average number of daily online messages for local leaders increased tenfold to hundreds, and finally reached 1,000

Photo by IC


t came as a shock to many when a new online messaging service, intended to provide the public with a direct line of communication to the country’s most senior politicians, was officially launched on September 8. Taking its name from the Communist Party’s central Beijing headquarters, the “Zhongnanhai Express” message board allows internet users to leave messages for all national senior leader and central agencies, providing a rare opportunity to bypass government red tape. Despite the site being accompanied by a so-called “users manual” in which 26 topics of conversation are listed as “prohibited” Chinese internet users have flocked to the message board by the thousands, with reports indicating messages to President Hu Jintao alone exceeded 30,000 during the site’s opening five days. The messages covered a wide spectrum of subjects and issues, ranging from pure greetings to complaints about social maladies and serious policy discussion over key social issues such as soaring housing prices, education and corruption.

A netizen logs on the frontpage of the Zhongnanhai Express on September 13, 2010. NEWSCHINA I December 2010

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Photo by Xinhua

President Hu Jintao engages live with netizens on on June 20, 2008.

by the end of 2008. Moreover, President Hu’s unprecedented online chat session appeared to send a strong political signal to local leaders, who in turn began to look increasingly to the internet as a method of influencing public opinion. On September 1, 2008, Lu Hao, Party Secretary of Gansu Province, became the first local party leader to publicly pledge to respond to online messages. Within one month, provincial leaders from five provinces including Hunan, Shaanxi, Shanxi, Henan and Guangdong, announced that they too would reply to online messages. According the data released by people., 44 provincial Party secretaries and governors and more than 100 of their deputies had replied to Internet users’ comments on the “message board for local leaders” by August 23 of this year. In 2009, launched similar message boards for National People’s Congress deputies, ministries, major corporaNEWSCHINA I December 2010

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tions and local public security bureau chiefs.

Virtual Politics?

Such experimentation clearly demonstrates the government’s ongoing attempts to connect with the public, leading some experts to hail the experiments as a step toward a more transparent government. “It is against this backdrop that online public opinion begins to cover a wide range of political, economic and social issues, giving the government access to what the people are most concerned about currently,” Shan Xuegang, vice secretary-general of the Internet center of the People’s Daily, told NewsChina. “Irrespective of the motivation behind it, these message boards are a good thing,” Professor Wang Yukai from China National School of Administration told NewsChina. However, Wang’s apparent optimism was tempered over concerns about the initiatives’ real effects. “It is not

enough to merely listen to online public opinion. The central government needs to take some real action to effectively tackle key social issues so as to boost the public’s confidence,” he said. “If no substantial results come from the message board in the end, it will be just another empty gesture,” he added. Others point out that it is impractical to expect the central government to reach out directly to the country’s grassroots. For Yu Guomin, director of the Public Opinion Research Center of Renmin University of China, the key still lies in China’s overall political and institutional reform. “Zhongnanhai Express itself is more significant in style than it is in substance,” he explained. “The real question is how to put in place, through political reforms, effective mechanisms via which public opinion can freely reach the leadership.”  (Rewritten by Yu Xiaodong)


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LAW Mitigation committees

Mediate or Litigate?

A recently passed law encouraging the out-of-court settlement of non-criminal cases is proving controversial. By Wang Baoquan, Tang Lu and Wang Xue


n August 28, the Standing Committee of the National People’s Congress (NPC) passed the People’s Mediation Law aiming to encourage the out-of-court settlement of civil disputes. Establishing People’s Mediation Committees to reinforce the role of “people’s mediators” to resolve everyday disputes between citizens, the law marks a major policy change. According to Hu Jihua, a member of the Judicial Committee of the NPC Standing Committee, “Grand Mediation,” as it is commonly referred to, “streamlines existing judicial, administrative and civil apparatus.” Despite the extrajudicial nature of “mediative hearings,” their decisions are legally binding and can be enforced by the courts at the request of either party.

Shanghai Experiment

Even before Grand Mediation was signed into law, similar practices for the settlement of civil cases were already commonplace. In Shanghai, a project aimed at integrating various mediation mechanisms was launched as early as 2006. Under the project, 17 district courts established “People’s Mediation Committees.” Similar mediation offices were also established by other government agencies, including procuratorates (the state judicial regulator), the police, housing bureaus and social security departments and was aimed at resolving civil disputes in their respective fields. Wu Zhiming, chief of the Shanghai Political and Legal Affairs Committee, told NewsChina that many mediators are former judges who evaluate the possible outcome of a lawsuit before taking it to court. If both parties agree to reach an accord through mediation, the case will be settled out of court.


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According to Wu, 35 percent of all grassroots-level civil cases in Shanghai in 2009, 160,000 in total, were settled through mediation, with a resolution rate of 97 percent. The Ministry of Justice claims that China had more than 4.9 million mediators working in more than 800,000 offices handling more than 7.67 million disputes last year, with a 97.2 percent resolution rate. Head of the research center of the Shanghai Political and Judiciary Commission Xu Bingzhi told NewsChina that earlier experience shows that litigation has its disadvantages in solving grassroots-level disputes. With a court ruling, there is always a “loser” and a “winner,” which often leads to further disputes and conflicts, while agreements reached through mediation are “more likely to be acceptable to both parties,” he told our reporter. To a certain extent, the lack of trust in the objectivity of court rulings on the part of civil plaintiffs explains the limits of litigation. Xu told our reporter that, in many economic disputes, the losing party tends to suspect that the judge has been bribed by their opponent, often leading to repeated petitions to the higher authorities or even to central agencies. “In reality a court ruling is often not the end of one dispute, but just the start of a new one,” said Xu. “An alternative is needed.” Another reason behind the courts’ preference for mediation is that local courts are over-burdened by civil lawsuits stemming from China’s rapid economic growth and massive social changes which have left many citizens feeling disenfranchised. “There are only about 50 judges in district courts who are responsible for a total of 8,000 to 10,000 cases a year,” said Zhou

Yougen, director of the Justice Bureau of Shanghai’s Baoshan District, where the Grand Mediation project was first launched. Modeled on the continental system, China’s judiciary does not recognize legal precedent, making grassroots-level civil disputes even more difficult to resolve. Based on the results of the Shanghai experiment, the People’s Supreme Court announced in 2008 that it would pursue “mediation over litigation” in civil cases. Wang Yu, head of the Department of Guidance of Grassroots Work under the Ministry of Justice told NewsChina that the law is aimed at defusing rioting triggered by civil disputes. “It is by nature a political task, with the goal being to maintain social stability,” he said.


However, Grand Mediation has raised eyebrows in legal circles, with some warning that the preference for mediation may undermine the rule of law. Although the law stipulates that mediation should be carried out in accordance with the free will of both parties, experts have warned that a national preference for mediation may dissuade civil plaintiffs from seeking court rulings. A source inside the Shanghai judiciary told NewsChina that the local courts are required to delegate at least

“There are only about 50 judges in district courts who are responsible for a total of 8,000 to 10,000 cases a year.” NEWSCHINA I December 2010

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Illustration by Liu Xiaochao

15 percent of all grassroots-level lawsuits to mediators regardless of the nature of the case. Others point out that official control of the mediation system threatens the independence of both the judiciary and the mediators themselves. “In some localities, Grand Mediation is monopolized and backed by the State, which is problematic,” said Wang Fuhua, a law professor from Shanghai Jiaotong University. He added that mediation organizations should be independent of State power and employ the legal models of “mature civil societies.” Wang’s view is echoed by Professor Zhou Yongkun from Suzhou University, who points out that giving law-enforcement powers to grand mediators effectively makes mediation both mandatory and thus subject to political influence. Despite opposition, the mediation law NEWSCHINA I December 2010

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has many supporters. Professor Fan Yu from the Law School of Renmin University told NewsChina that in dealing with various social changes during a period of national transition, the government has been relying excessively on heavy-handed law enforcement, offloading problems to a judiciary which lacks the resources to address them. “As people have diverse aspirations and requests, we also need to offer diversified solutions,” he said. A mediator surnamed Wang in Shanghai told our reporter that at the grassroots level, people often use the courts to “save face” by prevailing over an opponent. However, the “black and white” nature of a court ruling tends to make it unacceptable for one or even both parties. Wang sees mediation as a way of preserving the “face” of both parties, preventing the losing party from being humiliated and socially ostracized. He ar-

gues that China’s culture of “face” requires acknowledgement in its legal system. While acknowledging the positive impact of mediation, Professor Wang Fuhua remains skeptical, arguing that a preference for mediation offers only an expedient solution in this transitional period, while the long term goal of governance should still be the supremacy of law. Others would prefer mediation to take a more central role in the development of China’s legal system, with official Wu Zhiming arguing that a longterm strategy should be adopted to enshrine Grand Mediation in governance. “Grand Mediation is experimental, and needs further clarification in its operation, accountability and regulation before being established as a comprehensive and accountable system,” said Wu.  (Rewritten by Yu Xiaodong )


10/23/10 1:45 AM

SOCIETY Nut Harvest

Blood Pecans

Each year in a small mountain community a number of people are killed or seriously injured in falls from trees while participating in the local pecan harvest. However, this valuable crop continues to entice both locals and out-of-towners to try their luck in the branches. By Cui Xiaohuo in Lin’an

Photos by Zhen Hongge

Clockwise from top, Zhou Xuesheng, 62, injured his head when falling from a pecan tree; Shuai Fapeng, 40 started tree climbing sat just seven years old; a pecan picker’s hands stained black by the fruit juice.

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huai Fapeng deftly skins a nut, his fingers dyed black with juice. This particular nut came from a 25-year-old pecan tree growing on local mountain slopes in Lin’an, Zhejiang. Fall means time to harvest Lin’an’s delicious cash crop. At this time of the year, almost 30,000 pickers swarm to what locals call “the land of pecans” to scale trees without harnesses or safety gear in search of their fortune. Some pay a heavy price – each year hundreds fall from tall trees or even off cliffs in search of the sweetest produce, producing a grim tally of annual injuries and deaths. At the time of writing, six people have fallen to their deaths since this year’s harvest began.

Risky Business

On the morning of September 14, Fang Huiping, 56, was trying to dislodge pecans with a long bamboo pole when the tree he was perching on, its rotted trunk unable to support his weight, split down the center. Fang managed to catch hold of a branch before he fell to the ground. “I would have been killed but for that branch,” he told our reporter from his hospital bed. A farm laborer from neighboring Shexian County in Anhui Province, Fang supplements his income working the pecan harvest. The fracture caused by the fall has left Fang with a steel plate in his hip, unable to move without assistance. It was Fang’s first injury in an 11-year career as a pecan picker. Each year, a large number of Shexian farmers cross the provincial boundary into Lin’an to participate in the harvest. They can expect to make 2,000 yuan (US$300) for 10 days’ work in the harvest season, a small fortune to an impoverished laborer. The justification for the high pay is partly the risks inherent in the work, with injuries among pickers commonplace. This year alone, some 130 people have received treatment for injuries sustained during falls, with 40 beds in the small local hospital occupied by injured pickers, most of whom are over 50 years old. Zhou Xuesheng, 62, occupies a bed close to Fang Huiping. “I started to climb trees when I was 17, and this was the first time I’ve fallen,” he told NewsChina. “Next time I climb a tree, I’ll be afraid.” According to sources from the Lin’an City Bureau of Forestry, last year, a total of 10 deaths were reported. This is not a new problem. Official statistics show 11 deaths and 108 injuries in 2004, and 16 deaths and NEWSCHINA I December 2010

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over 200 injuries in 2006. “The pecan nuts harvested in Lin’an are stained with blood,” Li Wengang, vice mayor of Lin’an, told the media, adding that despite a government pledge to improve health and safety, accidents were still happening.

Core Industry

Shuai Fapeng’s village is nestled deep in the mountains. Pecan trees grow high on Lin’an’s mountain slopes and in adjacent areas with a humid and cool climate, and pecan forests cover a total of around 28,000 acres in Lin’an, concentrated in the areas around the region’s dozen townships. Almost every local man learns to pick pecans in childhood, with many continuing to participate in the harvest long into their fifties or sixties. “I started to climb pecan trees when I was eight years old,” Shuai told our reporter. Shuai’s 62-year-old fatherin-law Yu Shengrong is a farmer who owns

Struggle for Safety

Despite the dangers involved, the annual pecan harvest remains vital to the local economy, buoyed up by its immense revenue and a 500-year history. To reduce risks to pickers, the Lin’an government has invited forestry specialists to suggest workable safety measures, however, growers have dismissed every proposal so far. Some experts suggested introducing machines to shake the nuts out of the trees, reducing a reliance on people climbing them. Farmers claimed such machines “distort the shape of the nuts,” making them less saleable. Others suggested the injection of growth hormone into tree trunks to induce a windfall, but farmers again dismissed the proposal with claims it would reduce output. In 2003, the Lin’an forestry bureau tried to promote the use of safety harnesses when climbing trees. However, the pickers themselves complained the belt was too cumbersome. Shuai

“The pecan nuts harvested in Lin’an are stained with blood.” 500 pecan trees. A good harvest gives the family an annual income of around 80,000 yuan (US$11,430). Some farmers in the village, according to Yu, each own around 1,000 trees. After pecan pickers collect the nuts and carry them down to the farmer’s house at the foot of the mountain, merchants or middlemen pick up the nuts at a price of 50 yuan (US$7) per kilo. Transported to a food factory, the nuts are shelled, cleaned, boiled, and roasted in large pans, mixed with salt and seasoning. When the processed nuts are ready for sale, their price jumps by as much as 300 percent. By the end of September, the retail price of pecans had hit 90 yuan (US$14) per kilogram. Even poor-quality nuts can be ground down for their oil, which also has a high retail value. At present, the annual output value of the pecan industry in Lin’an totals 2.8 billion yuan (US$400m), accounting for over 10 percent of local GDP, with Lin’an responsible for over 99 percent of China’s pecan production. In recent years, pecans from Lin’an have found a market abroad, especially in the United States, Japan, Australia, and Southeast Asia.

Fapeng explained, “We have to make adjustments each step up or down the tree. It is very inconvenient and reduces efficiency.” In 2007, the Lin’an Pecan Industry Association attempted to take out health insurance policies on all their pickers. However, the policy was cold-shouldered by its would-be beneficiaries because the maximum compensation was only 100,000 yuan (US$14,700), far below the likely hospital bill for a serious injury. Wang Zhengjia, an assistant professor from the Zhejiang Agriculture and Forestry University has been following this issue for years. According to him, pecan farmers and pickers care more about short-term profits than safety. “Over 70 percent of the local farmers’ income comes from pecan nuts,” he told NewsChina, adding that the industry is part of life for the residents of Lin’an and the surrounding areas. Wang added that only an innovative breakthrough such as specially-bred dwarf pecan trees might offer a solution to the rate of fatal accidents. Similar species have proven effective in reducing accidents among fruit pickers in some orchards. However, for now, the pecan pickers of Lin’an are determined to risk life and limb to protect their livelihoods. 


10/23/10 1:45 AM

SOCIETY Academic Attacks

Fraud Feud Gets Bloody

Contract attacks on two academic whistleblowers have drawn attention to spiraling levels of corruption within China’s academic and scientific community. By Wang Yan


On the evening of June 24, the first attack was launched against Fang Xuanchang, a science editor of Caijing Magazine who was apprehended by two men in an alleyway close to his Beijing home and beaten with metal bars. Fang, a trained martial artist, managed to overcome both assailants despite sustaining serious head injuries. Police defined the case as a “revenge attack” and launched an investigation, during which a similar attack occurred. The second victim was writer Fang Zhouzi, a well-known public figure and vocal critic of academic fraud. At around 5pm on August 29, Fang Zhouzi was attacked near his home in in Beijing’s Shijingshan district. According to Fang’s statement, he was approached by two men armed with pepper spray, a hammer and an iron bar. When Fang attempted to flee, one man threw the hammer at him that hit him in the back, causing bleeding and minor bruises. News of the attack caused a stir online thanks largely to Fang’s high profile. After the attack, Fang employed two professional bodyguards while Peng Jian, a public lawyer, immediately


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Photo by Zhen hongge


iao Chuanguo, a urological surgeon and candidate for entry into the prestigious Chinese Academy of Sciences (CAS) was detained on arrival at the Shanghai Pudong International Airport on September 21 by police after a trip abroad, due to his suspected involvement in recent assaults on two men who had publicly questioned his claims of a scientific breakthrough in urology. Before Xiao became director of the Department of Urology at Tongji Medical School of the Huazhong Science and Technology University in 1997, he was on the faculty of New York University, and was also serving as Dean of the Urology Department of Wuhan Union Hospital in central China’s Hubei Province at the time of his arrest.

Supporters of either Fang and Xiao stand outside the court in western Beijing, October 10.

launched an online foundation in his own name to raise money to support and protect whistleblowers spearheading the grassroots anti-corruption drive in China. On September 21, Beijing police announced the arrest of four suspects involved in the attacks on Fang Xuanchang and Fang Zhouzi. During interrogation, three suspects confessed that urological surgeon Xiao Chuanguo had hired them to carry out the attacks, paying 100,000 yuan (US$14,300). Xiao later admitted to police that he ordered the attacks in revenge for both men’s public criticisms, alleging that his medical accomplishments were academic frauds, which had thwarted his bid to become an alumnus of the CAS .


The enmity between Xiao and the two Fangs stemmed from a surgical procedure developed by Xiao, which, he claimed, could help patients with spinal injuries restore some bladder and bowel control. Fang Zhouzi accused Xiao

of misrepresenting his academic credentials and fabricating research data. The dispute first started in 2005, when Fang Zhouzi posted evidence of Xiao’s “fraud” on his website aimed at debunking the effects of the Xiao Procedure. Fang claimed that Xiao’s claims of an 85 percent success rate for the procedure and worldwide accolades for the so-called Xiao Procedure were unfounded. The famous “Xiao Procedure” underwent animal testing while Xiao was still in the US in the late 1980s and began human trials in China in 1995 after his return. Fang Zhouzi told NewsChina that by the time Xiao started clinical trial on humans, the results of animal trials remained inconclusive. During a previous interview with NewsChina in late 2009, Xiao claimed that he didn’t carry out human trials in the US because “the application process for funding was long, normally requiring more than one and a half years, with very strict conditions for approval.” After completing human trials in 1995, Xiao NEWSCHINA I December 2010

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said in a public statement in 2003, “Of 15 operations, 10 were successful.” The Ministry of Public Health organized appraisal meetings twice on the “Xiao Procedure” between 1999 and 2004, inviting prestigious specialists such as Dr Qiu Fazu, one of the country’s top surgeons, as well as seven other academicians from the CAS. They were required to pass judgment on the “Xiao Procedure.” Their evaluation stated that it was “at an advanced and international level” and the CAS recommended that the “Xiao Procedure” be recommended to surgeons nationwide. The procedure also won a number of national medical awards and began to be employed in some hospitals. The high success rates of the “Xiao Procedure” claimed by the national promotional campaign appealed to many patients who had been left severely disadvantaged by spinal injuries. According to Fang Zhouzi, Xiao has conducted his procedure on over 1,500 Chinese patients, charging 30,000 yuan (US$5,500) a time. Boosted by domestic prestige, Xiao began a series of international tours, lecturing in the US, Argentina and Germany in an effort to market his procedure to the international medical community. Clinical trials of the Xiao Procedure duly began at William Beaumont Hospital in Royal Oak, Michigan, in December 2006. Fang Zhouzi’s scathing public criticism of Xiao Chuanguo came at the peak of his achievements. Enraged, Xiao sued Fang time and again for libel, a war of words which has raged ever since. Then in late 2009, science editor Fang Xuanchang edited a series of investigative reports into the efficacy of Xiao’s procedure in the biweekly Chinese Science News. Consisting of interviews with patients who had undergone unsuccessful operations and doctors critical of the Xiao Procedure as well as with Xiao Chuanguo and his supporters, the investigative reports cast considerable doubt upon Xiao’s academic achievements and the effectiveness of hundreds of operations he had performed. The publication caught widespread public attention, and Xiao’s patient numbers dropped radically.


In early October, when Xiao was in custody, the Huazhong Science and Technology University issued a public statement saying the university was shocked by the police investigation. The statement added that the university would follow the case closely and take appropriate action NEWSCHINA I December 2010

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once the court had announced its verdict. Domestic academic circles have proven reluctant to stand by their initial approval of the Xiao Procedure. In response to media questions, some experts from the 2004 evaluation panel on the Xiao Procedure admitted that the evaluation was done in haste. “The effectiveness of the Xiao Procedure should have independent third party verification through contrastive comparison between the patients’ objective medical indexes before and after surgery. If the comparison shows improvement, then it is effective, otherwise it is a failure,” Jin Xiyu, a urology professor from the No. 3 Military Medical College, told Southern Weekly. On September 29, 31 urological scientists and doctors from the international community, including Americans, Germans and Argentines

“While there has been significant progress in science, China needs to substantially improve its evaluation system”

issued an open letter in support of Xiao Chuanguo. In the letter, they endorsed his academic achievements and stated, “Dr Xiao is a compassionate man who is respected worldwide for his integrity and his innovative scientific contributions to society.” During a telephone interview with NewsChina, Kenneth Peters, chief of the Urology Department of Beaumont Hospital, Royal Oak, Mich. said that he and his colleagues were impressed by Dr Xiao’s theory and data. “From a scientific perspective, the findings of Dr Xiao’s basic research proving that rerouting can occur in animals have been independently verified. His human trials have been published in peer-reviewed journals. According to Peters, preliminary results show that seven out of nine children in Beaumont Hospital’s initial Xiao Procedure test group have shown marked improvement. “So far, the benefits

[of the operation] outweigh the risks,” he said, adding that the trials would continue. “Even if this procedure only helps 50 percent of spina bifida patients, it is still remarkable.”


Fang Zhouzi told NewsChina that not a single successful Xiao Procedure has been recorded from among more than 100 patients he and his team have contacted. Instead, their investigation has discovered numerous cases of severe and debilitating side effects. Fang Zhouzi and Fang Xuanchang are attempting to press charges of attempted murder against Xiao, though Beijing police have only charged him in a local court with instigation – a similar charge to conspiracy to commit a crime. On October 10, Xiao was sentenced to five and a half months in prison. Four other suspects also received sentences ranging from one and a half to five and a half months’ detention. The violence of these two attacks and the ongoing decade-long feud between Xiao and his detractors are indicative of deep-rooted problems in China’s scientific community, academic institutions and even the judiciary. Fang Zhouzi continues to lambast those he sees as frauds and quacks, despite the disavowal of his criticisms of Xiao Chuanguo by members of the international medical community. In response to the attacks, Rao Yi, dean of the School of Life Sciences at Peking University, published an editorial in Science magazine in early September criticizing China’s research culture: “It is an open secret that, in order to obtain research grants in China, good research is not as important as nurturing relationships with powerful bureaucrats and their favored ‘experts.’” The article continues: “A significant proportion of researchers in China are spending too much time building connections and not enough time attending seminars, discussing science, conducting research, or teaching.” Rao elaborated on his view in an email interview with NewsChina: “While there has been significant progress in the field of science, China needs to substantially improve its evaluation system. The problem is not that China does not know how to improve, but that there are self-interests by powerful people who do not want to see changes. Most of these are actually trained in the West, but they do not want to use what they learn there.” 


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Jiaolong Submersible

Plumbing the Depths Reaching depths of over 12,000 feet, the newly developed Jiaolong submersible has allowed China to join the United States, France, Japan and Russia as the fifth nation capable of manned deep-sea exploration.

Photo provided by the COMRA

ďƒŞBy Wang Jiamin

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NEWSCHINA I December 2010

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hen aquanaut Ye Cong and two marine science researchers emerged into 80 degree temperatures from their tiny sealed cockpit on the submersible Jiaolong on July 13, they were drenched by basins of seawater thrown over them by celebrating colleagues. You’d think Ye Cong’s team would be used to being soaked. Over the past year, they have received 37 such welcomes after returning from the ocean floor. This time however, the crew had particularly good cause for excitement. Jiaolong, the Chinese submersible named after a mythical sea dragon capable of invoking storms and floods, had reached a depth of 3,759 meters (12,333 feet) in the South China Sea, its crew successfully performing a series of tasks before finally planting a Chinese flag in the seabed at the greatest depth ever reached by a Chinese-made manned submersible. Yet, cautious about a scientific undertaking so fraught with risks and difficulties, the Chinese authorities refrained from announcing the Jiaolong’s groundbreaking achievement until the end of August, when the Ministry of Science and Technology (MOST) and the State Oceanic Administration (SOA) made a joint announcement. The Jiaolong’s achievement has made China the fifth country to successfully send a manned submersible to a depth exceeding 3,500 meters (11,380 feet).


Submersible Jiaolong resurfaces after successfully completing a diving test in the South China Sea. NEWSCHINA I December 2010

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China’s deep-sea exploration program has funneled all its resources, including aquanaut training and surface support technology, into the Jiaolong submersible. Designed to reach a maximum depth of 7,000 meters (over 22,000 feet), the current global limit for a manned submersible, the Jiaolong is still undergoing extensive testing. “Previously we have carried out trials at depths of 50 meters (164 feet), 300 meters (984 feet) and 1,000 meters (3280 feet). The 3,000-meter (9,840 feet) depth trial is very important,” said Liu Feng, director of the trial dives. The Jiaolong can accommodate a crew of three, usually consisting of one aquanaut and two researchers. When a dive is in progress, the Jiaolong maintains contact with the surface through radar, the mother ship monitoring the submersible in real time and collecting data on its depth, longitudinal inclination, rolling motion, speed, interior temperature, and oxygen status. It then relays information and instructions to the dive team. ➥


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Clockwise from left: Aquanaut Ye Cong; Submersible Jiaolong in the maintenance workshop; Jiaolong plants a Chinese national flag on the seabed of the South China Sea

The Jiaolong’s 37th dive was conducted east of Hainan island, China’s southernmost province, where the sea floor slopes gently to an average depth over two miles. The China Ocean Mineral Resources R&D Association (COMRA) meticulously investigated sea floor terrain, ocean currents and geology in the selected area well in advance of the dives being launched. The area also had to be trawled for dangerous debris such as used fishing nets and floating plant matter which can entangle submersible propellers. At 8 AM on July 13, the dive team was ready to go. Aquanaut Ye Cong, 31, has conducted oceanic research for seven years, diving in the Jiaolong 28 times, making him the most senior aquanaut from a total of 11 trained specially for the project and the natural choice to lead the submersible’s most ambitious dive to date. On the rear deck, support crew checked the submersible’s communication equipment, navigation system and other functions. “Before each dive there is a very long list of items to be checked,” Ye told NewsChina. The Jiaolong utilizes an unpowered diving and ascent mechanism consisting of four iron ballasts of adjustable weight attached to both sides of the submersible. When in free fall, these ballasts cause negative buoyancy to help the submersible descend at a constant speed. Upon reaching the pre-set depth, two of the ballasts are jettisoned to give the submersible zero buoyancy, suspending it in the water. Upon completion of an exploratory cruise, photography and collection of


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samples, the last two ballasts are dropped, causing positive buoyancy allowing the submersible to ascend at a constant speed. According to Xu Qinan, the 74 year old chief designer of the Jiaolong, the maximum diving and ascending speed of the submersible is 42 meters (137 feet) per minute, meaning it takes a three-hour freefall to reach its 23,000 feet depth limit. The diving speed on July 13 was set slightly slower, at 37 meters (121 feet) per minute, and it took the crew one hour and 40 minutes to reach their set depth, sending communications to the mother ship at regular intervals. 3,000 meters (9,800 feet) down the external pressure on the submersible’s hull amounts to more than 3,000 tons per square meter (279 tons per square foot), which would feel equivalent to carrying 30 tons on one hand. At the Jiaolong’s maximum safe depth of over two miles, the pressure increases to 7,000 tons per square meter (651 tons per square foot), enough to crush a paper cup to the size of a thimble. Despite the tropical latitudes, temperature also drops rapidly. A surface temperature of 30 Centigrade (86 Fahrenheit), falls to 2 Centigrade (35.6 Fahrenheit) 3,500 meters (11,500 feet) down, with the submersible’s interior temperature dropping from 39.7 Centigrade (103.5 Fahrenheit) to about 15 Centigrade (59 Fahrenheit) during the dive. The Jiaolong’s titanium hull responds automatically to these atmospheric fluctuations. When pressure increases and the temperature

drops, the cockpit will somewhat shrink and the buoyancy will also change. “The change of pressure and temperature are key elements of deep-sea diving,” Liu Feng told NewsChina. “We had to conduct a precise calculation of the ballasts’ weight according to the specific conditions of the day.” Once suspended above the ocean floor, Ye Cong’s team got to work on the dive’s scheduled tasks. “We used the sub’s robotic arm to plant a flag on the seabed and take samples of water and marine life,” Ye told NewsChina. At 4:53 PM, their computer revealed that they had reached their 3,759 meter (12,333 foot) target depth. At around 6 PM, Jiaolong emerged into the tropical sunset. The team had been underwater for nine hours and three minutes, close to the vessel’s maximum working time of 12 hours. “Next year, we’ll carry out the 5,000 meter (16,400 feet) depth trial,” said director Liu. “After that will come the 7,000 meter depth trial.” On reaching 7,000 meters (over 22,000 feet), Chinese aquanauts and marine researchers will be able to access 99.8 percent of the world’s ocean floor.

Deep Sea Science

On September 13, two months after its historic dive, the Jiaolong was berthed in an old redbrick workshop at the China Scientific Ship Research Center (CSSRC) in Wuxi, Jiangsu, waiting for maintenance and servicing for its next dive. The CSSRC, a member of the State-owned China NEWSCHINA I December 2010

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Jiaolong Sectional Drawing Sonar transmitter

Bow sonar range finder Shaft passage thrust

Fin stabilizer

Cockpit hatch Ballast tank

Imaging sonar


Sonar housing High pressure air tank Auxilary battery

Primary battery

Front keel sonar range finder

Pressureadjustable water cabin

Observation porthole

Bracket Extra high pressure sea water pump

Shipbuilding Industry Corporation (CSIC), is responsible for R&D on the Jiaolong project. Despite being 27 feet long, 10 feet wide and 11 feet high, the Jiaolong weighs less than 22 tons ashore. Xu Qinan, the submersible’s chief designer and deputy chief engineer of the CSSRC, told our reporter that the vessel’s sealed cockpit measures is seven feet in diameter, giving the three-man crew 170 cubic feet of space which they share with the submersible’s control panels, display system, seating and life support. The cockpit is the most crucial unit of the submersible, the titanium alloy housing designed in China but manufactured in Russia. According to Xu, both the prototype and the Jiaolong itself include parts which China is unable to produce. “The robotic arm and lighting equipment is imported from the US and the imaging equipment is from Japan,” he told NewsChina. However, Xu was quick to emphasize that the Jiaolong remains a Chinese vessel. “The designs, from initial schematics to the final blueprints, were all done by Chinese technicians and engineers,” he told our reporter. “The assembly, commissioning and dive trials were all conducted by Chinese technicians.” To date, over 100 Chinese research institutions and technology companies have contributed expertise, personnel and equipment to the Jiaolong project. According to Xu, the Jiaolong has 12 integrated operations systems, of which the most crucial systems such as life support and ballast control were all developed in China. The life NEWSCHINA I December 2010

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Hydraulic pressure regulator

Disposable ballast Doppler speedometer

support system can guarantee 12 hours of air for the crew under normal circumstances. In an emergency, it can provide up to 84 hours of oxygen. China began to entertain aspirations of deepsea exploration in the 1960s, when research mainly focused on autonomous underwater vehicles (AUVs). In the 1990s, Chinese AUVs reached a depth of more than 6,000 meters (almost 20,000 feet). At the same time, strides were being made in the development of marine survey equipment, which, according to Xu, “laid technological foundations for the development of a manned submersible.” As well as overseeing the Jiaolong’s trial dives, director Liu Feng is also COMRA’s vice director of administration. Founded in 1990, COMRA has played a key role in pushing forward China’s deep-sea exploration. It is one of eight current contractors to the International Seabed Authority, each of whom is allotted an area of sea floor totaling 150,000 square kilometers (58,000 sq miles) to explore for mineral resources. In January 2002, COMRA submitted its manned deepwater submersible project to the Ministry of Science and Technology. Five months later, the project was approved. The Jiaolong represents one part of China’s intensive research into maritime industry and development. “In recent years, China has strengthened its exploration of deep-sea resources,” said director Liu. “It was practical need that spawned Jiaolong. There were also plans to develop related


Sample tank

Bow sound wave range finder

fields such as mining research and development, smelting and environmental protection technologies,” explained director Liu. According to Liu, the COMRA mainly explores for three kinds of mineral resources on the seafloor: polymetallic nodules, hydrothennal sulfide and cobalt crusts. Its scientific survey ship Dayang Yihao (Ocean No.1) has conducted extensive exploratory deep-sea research and prospected for polymetallic nodules in the Pacific and the Indian Ocean. “Many countries set great store by strategic use of deep-sea technology. It is important to scientific research, resource exploration and national defense,” Rear Admiral Yin Zhuo of the Chinese Navy, told NewsChina. “China has speeded up the development of manned submersibles since 2000, but our manned submersible technology still needs further testing to reach a par with other nations.” On August 26, the construction began on a national deep-sea exploration base in Qingdao, Shandong, one of China’s foremost port cities. The base, incorporating docks, plants, laboratories and submersible mother ships, aims to provide an open platform for the expansion of China’s deep-sea exploration program, which, since the phenomenal success of the Jiaolong, looks set to become one of the world’s largest and most diverse.  (Rewritten by Yuan Ye)

35 10/23/10 1:47 AM

ECONOMY Superport

AThe construction NewofLandmark a superport in Brazil financed largely through Chinese investment has drawn wide attention, with some even calling it the embodiment of a new era in Sino-Brazilian ties.

Photos by Fabio Rossi/Globo via Getty Images

By Chen Dongyi

View of Acu Superport, opposite page, a Chinese delegation visits the port, April 16, 2010


atin America, often dubbed “backyard of the United States,” has in recent years seen numerous Chinese-funded projects in sectors such as mining, telecommunications and automobile manufacturing. In this context a gigantic port, being built with Chinese funding on the Rio de Janeiro coastline is drawing increasing attention. The British Guardian newspaper reported that the project involves an investment of 1.6 billion British pounds (US$2.5bn) and covers a land area equivalent to 12,000 soccer fields, making it the largest port are constructed. The project is expected to be completed by 2012.


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The report noted that its 10-berth pier will play host to a “globetrotting armada of cargo ships,” including the 380-meter long Chinamax – the largest vessel of its type manufactured in China, capable of transporting 400,000 tons of cargo. This increasing Chinese presence has been buoyed by fast growing trade between China and South America, especially after 2009 when China overtook the United States to become the largest trade partner of Brazil, the region’s economic powerhouse. China now looks set to become the top foreign investor in Brazil by the end of this year, with Chinese investment totaling US$2 billion in the first six months of

China-Brazil Trade Volume in Q1-Q3 Brazilian export to China US$23.191 billion, up 33.6% Brazilian import from China US$18.209 billion, up 64.3% Brazil’s top three trade partners in Q1-Q3: 1. China (US$41.4 bn) 2. United States (US$34.1bn) 3. Argentina (US$23.6bn) Source: the Foreign Trade Secretariat of Brazil NEWSCHINA I December 2010

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2010, compared with US$83 million in 2009. Brazil’s abundance in resources such as iron ore, crude oil and soybeans is attracting a variety of eager Chinese firms, many of which are State-owned. They come in search of procurement opportunities in a bid to sustain economic expansion at home. In the past decade, bilateral trade has increased more than 10 times from US$2.3 billion in 2000 to US$36.1 billion last year.

Alleviating Restraints

Brazil, one of the so-called BRIC nations, which includes other emerging markets Russia, India and China, achieved an annual economic growth of approximately 5 percent over the last few years, thanks to thriving exports driven by rising global demand for Brazilian goods such as grain, oil and iron ore. Yet, the country’s exports are somewhat restrained by outdated port facilities in dire need of capacity expansion. Port expansion efforts initially began several years ago, attracting a surge of foreign investment to Brazil. This undertaking, however, is still falling short of demand. Even today, various ships are seen floating idle outside Brazilian ports, waiting for their turn to load or unload. The heightened trade and business relations between Brazil and China seem to justify China’s ambitious bid for a large share in Brazil’s port industry, particularly in view of China’s mammoth US$2.6 trillion foreign exchange reserves and the fact the Chinese economy serves as a major engine powering a global economy emerging from recession. Port cooperation was high on the agenda during Brazilian President Luiz Inacio Lula da Silva’s state visit to China in May last year. The two sides signed a Memorandum of Understanding, under which the Stateowned China Communications Construction Group was expected to participate in the expansion of the Barnabe Bagres port complex in Santos, which will increase the capacity of the port from today’s 110 million tons per annum, up to more than 240 million tons. In the coming decade, investment in Brazil’s ports is expected to hit US$25 billion, according to the Chinese Ministry of Communications. NEWSCHINA I December 2010

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Larger Presence

Agreements signed during Lula’s China visit also included a US$10 billion loan from the China Development Bank to Brazil’s Stateowned oil company Petrobras. In return, Petrobras will guarantee the supply of 200,000 barrels of oil per day to China over the next 10 years. Plans to build a steel plant in Brazil undertaken by China’s State-owned Wuhan Iron and Steel Group and an automobile plant are also underway. Moreover, huge Chinese investment is being funneled into the energy and infrastructure industries in other South American countries. According to the 2009 Statistical Bulletin of China’s Outward Foreign Direct Investment issued by the Chinese Ministry of Commerce, China’s investment in Latin America totaled US$7.33 billion in 2009, doubling that in 2008 and accounting for 13 percent of the total outbound investment that year. However, a growing Chinese presence in South America has alarmed some observers in Washington who claim China is replicating its ongoing extraction of natural resources in Africa, and that an ever larger Chinese investment presence in South America will harm US interests. Cai Yu, a researcher and assistant director of the Institute of Latin America Studies under the Chinese Academy of Social Sciences in her speech delivered at the Woodrow Wilson International Center for Scholars in May, said that China was fully aware of the traditional strategic importance of Latin America to the United States. She was careful to add that China has no intention of encroaching upon US turf. “China is a developing country, and to some extent, needs Latin America to provide development opportunities,” Cai said. “China’s investment and business activities in this region are based on commercial perspectives, in a hope to develop win-win relationship with Latin America.” “It’s not a threat,” said US Assistant Secretary of State Arturo Valenzuela, referring to Chinese investment in a recent interview with Hong Kong-based Phoenix TV during his visit to Beijing for talks on Latin American affairs in August. “We create jobs through investment and trade, China has become a larger player in this regard. That benefits the countries of the western hemisphere, all the Americas,” he continued.

China’s investment in South America Brazil: State-owned Wuhan Iron and Steel Group signed an agreement with Brazil’s mining, energy and logistics conglomerate EBX last November to invest US$400 million in EBX’s MMX subsidiary, making the Chinese steelmaker the second-largest shareholder in MMX. In addition, the Chinese company will also build a steel plant in the port of Acu. Venezuela: China agreed to provide soft loans worth US$20 billion to Venezuela’s energy sector via the China Development Bank this April. Ecuador: The country has already signed around US$5 billion worth of bilateral deals with China this year, including US$1.7 billion to help build a hydro-electric dam and US$1 billion of investments in oil exploration and infrastructure projects. In 2009 direct Chinese investment in the country was just US$56 million. Argentina: China National Offshore Oil Corporation purchased a 50 percent stake in Argetina’s Bridas Holdings for US$3.1 billion this May. Peru: In 2007, the Aluminum Corp. of China bought Peru Copper for US$869 million.

37 10/23/10 1:47 AM

ECONOMY Banking Security

Keeping the Money Safe China’s attempts to rein in the property market and relax monetary policy have led to regulatory worries about increasingly reckless investment and loan policies in domestic banks. By Leo Zhang


ecent news that China’s banking regulator is likely to significantly raise the required capital adequacy ratio for lenders has led to stock market jitters over banks’ profitability. Increased demand on a stronger capital base follows a series of regulatory moves to standardize the routine operation of Chinese banks, some of which have been found to be involved in vicious competition for customers. Although the central bank has capped deposit rates, quite a few banks chose to offer other financial incentives to attract clients. Since the beginning of this year, rivalry for deposits has grown increasingly fierce as banks strive to reach the deposit-loan ratio of 75 percent set by the government regu-

lator following a lending blowout last year. In September, the China Banking Regulatory Commission (CBRC), China’s State banking watchdog, publicly criticized some Chinese banks for “bribing” investors by offering them free vacations and helping with children’s school fees, with some banks even finding jobs for customers’ relatives. According to a CBRC press statement, such practices had “exacerbated harmful competition among lenders and misled savers.” The CBRC singled out branches of Huaxia and Bohai banks in Jinan, Guangdong Development Bank in Shanghai and branches of the Agricultural Bank of China and China Everbright Bank in Shenzhen. The Commission pledged punitive action against “errant” banks, adding that the “reckless pursuit of profits” may place the asset quality of banks yet to regain their financial strength in jeopardy.

Heightened Risk

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Source: People's Bank of China

Previously, Chinese banks have only been required to set aside 1 percent of total loans as a safeguard against toxic debt. According to media reports, the CBRC may force an increase to 2.5 percent. China’s “Big Five” State-owned banks have already exceeded this percentage, but smaller banks will feel the pinch as they struggle to meet this target by 2011. The CBRC has also stipulated that large State banks must have a capital adequacy ratio of at least 11.5 percent, while the minimum for medium-sized listed lenders is 10 percent. However, under new proposals, this capital adequacy ratio may increase

by four percentage points across the board if regulators deem it necessary to restrict growth in the credit market, according to some news reports. “There’s a trend for banks to boost capital adequacy to offset inflation and risk,” Chen Zhihua, an analyst with Changjiang Securities, told NewsChina. “I don’t think regulators will drastically raise capital requirements in the short-term, as banks will face difficulties in meeting them,” Chen added, pointing out that business growth would be curtailed by excessive restrictions, something the central bank is desperate to avoid. “Shares in banks are likely to drop in the fourth quarter as China’s economic growth may further slow during that period,” said Wei Tao, an analyst with China Securities. “However, if the country manages to control inflation and post sustained consumer spending growth, there’s the possibility of a rebound.” Wei added that any jump in the value of bank shares tends to be fragile as the market usually overreacts to subtle changes in macroeconomic and industrial policies. Ye Yunyan, an analyst with China Galaxy Securities, echoed this view, telling our reporter that fund-raising platforms in local government need to be reined in, while rumors of new capital restrictions will have repercussions on the stock market. Ye revealed that under the new restrictions, the total credit quota of China’s banking sector may drop to as low as 6 trillion yuan (US$899bn) next year, compared with 7.5 trillion yuan (US$1.1tn) this year, strangling growth. He added that those lookNEWSCHINA I December 2010

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Mortgage Lending

Industry insiders said financial regulators have been conducting spot checks on whether banks are complying with government curbs on mortgages for non-owneroccupied homes and imposing tougher rules on lending to property developers. Since April the central government has rolled out a slew of measures to prevent a property bubble, including downpayment NEWSCHINA I December 2010

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hikes and increased mortgage rates for second homes. However, such efforts have failed to bring prices down. In late September, the State Council announced a new set of nationwide policies to further tighten mortgage lending. They came at a time when public complaints emerged decrying the ineffectiveness of restrictive housing policies in curbing runaway house prices which have left most buyers frozen out of the market. Banks have been ordered to stop providing mortgages to buyers of three or more homes. First-time buyers need to make a down-payment of at least 30 percent of the total price, instead of the previous 20 percent. The State Council also said that it will press ahead with plans for a trial property tax, with a view to extending this tax nationwide, though it didn’t give a timetable. Shanghai and Shenzhen are expected to be among the first batch of cities to introduce a property tax as early as this year. “We believe that government measures to deal with asset prices [such as property prices] and interest rate hikes are the two key factors that will decide the performance of bank shares,” said analyst Chen Zhihua. “The stock market will become volatile as the booming property industry may incur stronger-than-expected policy clampdowns.” Chen noted that anticipated appreciation of the yuan has stoked fears of a slowdown

Illustration by Wu Shangwen

ing to invest in the sector should focus on smaller banks with low valuations and thus higher growth potential. In October, China temporarily raised reserve requirements for six large commercial banks; Industrial and Commercial Bank of China, China Construction Bank; Bank of China, Agricultural Bank of China, China Merchants Bank and China Minsheng Banking Corp. The 50 percentage point increase brings the required reserve ratio to 17.5 percent, another regulatory attempt to control credit growth, but it is also a move made to prevent excessive curtailment of the credit market. The central bank said in its 2010 financial stability report that credit invested in the real estate sector would remain stable, though it urged lenders to be on high alert as to the influence of housing price volatility on such loans. The report added that domestic banks need to replenish their core capital base via retained earnings and fresh injections from shareholders. Almost all Chinese lenders have announced plans to issue new shares and debt this year.

in economic growth, increasing the potential risks of macroeconomic adjustments. He added that although currency appreciation may benefit banks in the short term due to mounting expectations of asset price hikes and inflation, it will adversely impact lenders over time and boost fluctuations in share prices. However, some industry analysts are still expressing optimism towards the banking industry, saying the fundamentals for profitability haven’t changed. “There are big uncertainties in regulatory policy on toxic loans as well as credit extended to local government,” said a statement from analysts at Citic Securities International. “But we think their impact will only be short-lived while banks maintain strong momentum in profit growth.” “Regulators may set different capitalto-loan ratios and allow leniency periods for banks based on their risk-management abilities,” said Mao Junhua, an analyst with China International Capital. “We think the existing policies are not as severe as previously thought and mainland-listed banks have room for 20 to 30 percent share price growth in the next 12 months.” 


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Photo by Wang Jingwu/IC


An open-cast rare earths mine in Inner Mongolia

Rare Earth Trade Disputes

AA tradeNew Test for Sino-Japan Relations dispute over rare earth minerals has become the latest in a string of incidences threatening to fracture Sino-Japanese relations.


trained bilateral relations between China and Japan are set to be further tested by fallout stemming from a growing trade dispute in the unlikely area of rare earth minerals. The decision by 32 Chinese companies specializing in the export of rare earths to suspend shipments to Japan comes just weeks after the highprofile detention, and subsequent release of a Chinese fishing boat skipper by Japanese officials. According to reports in the The New York Times all 32 licensed companies currently


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operating in the Chinese rare earth industry halted shipments of rare earths to Japan on the same day, September 21. The report also quoted China’s commerce minister Chen Deming as suggesting that Chinese entrepreneurs might have halted shipments because of “their own feelings towards Japan,” but the minister failed to address why the 10 foreign-owned companies of the 32 total also chose to suspend trading. Of course, China was quick to deny reports that it had imposed any official ban on the export of rare earths to Japan, which,

Photo by IC

By Chen Dongyi

Japan Business Federation Chairman Hiromasa Yonekura (right) and Toyota Motor Corp. Chairman Fujio Cho, head of a Japanese business delegation, attend a press conference in Beijing, Sept. 7. NEWSCHINA I December 2010

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until the suspension in trade, accounted for approximately half of China’s total export of rare earths, a key material used in a wide range of high-tech products such as wind turbines, hybrid cards, computer hardware and sophisticated weapons. At a China-European Union business meeting in Brussels in early October, the Chinese Premier Wen Jiabao told business and political leaders that China had not imposed any bans on the export of industrial minerals for political purposes, and that it did not intend to stop exports in the future. While refuting accusations of an export embargo, China claimed that it is necessary for the country to manage and restrict rare earth exports to maintain the country’s long-term sustainable development.


Last year China produced approximately 120,000 tons of rare earth minerals, accounting for 97 percent of the total global production. The weight is disproportionately high in view that the country’s reserves only account for an estimated 31 percent of the world’s total. Former Soviet nations combined account for 22 percent; the United States, 15 percent; Australia, 5 percent and India, 3 percent. According to Song Xiaojun, a military affairs commentator at the China Central Television (CCTV) and Phoenix Television, China’s export of rare earths started in the late 1970s. However, since its inception, exports have operated outside, and occasionally counter to national strategy. As a result, individual provinces have explored reserves excessively, competed with one another domestically, and signed numerous agreements with foreign buyers. Chao Ning, an official from the Chinese Ministry of Commerce, said in a recent industry forum in Beijing that China’s reserves of rare earth minerals dropped by 37 percent between 1996 and 2009, and now stand at an estimated 27 million tons, NEWSCHINA I December 2010

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“If China succeeds in protecting its rare earth minerals, the country will move on to protect other commodities that are also deemed to be important to national interests.” meaning that China’s supply can only be sustained for 15 to 20 years under current demand. “China is not the only country that has rich rare earth resources,” said Chao. “But, China has been prepared to supply the world, often at the cost of environmental deterioration and natural resources depletion.” Industrial experts and officials noted that the period typified by random exploration and low-price sales had already drawn to a close. Restriction on rare earth exports began in 2006, and China set an export quota for rare earth minerals totaling 30,258 tons for 2010, a sharp decrease of almost 40 percent from 2009. Despite the reduced export volume, Chinese experts widely believed it would not have an impact on industrial development in foreign countries such as Japan, as these countries are thought to have stockpiled large quantities of rare earths. Ye Hailin, a researcher from the Institute of Asia-Pacific Studies at the Chinese Academy of Social Sciences said in a recent interview with CCTV that the reason why foreign nations make a big deal about China’s mineral export restriction is that they don’t want to see an increasingly muscular China claim a bigger say in the distribution and pricing of strategic natural resources.

“If China succeeds in protecting its rare earth minerals, the country will move on to protect other commodities that are also deemed to be important to national interests,” said Lin. Moreover, Chinese experts believe that foreign buyers have grown accustomed to cheap Chinese imports to fuel their own domestic industrial development. Industrial officials claimed that it is justified for China to restrict rare earth exports, and the practice is in compliance with WTO rules. They added that China has not set any restriction on semi-processed rare earths, which could largely meet the market demand.


The Japanese ambassador to China, Uichiro Niwa, has been in talks with his peer ambassadors from other countries over the issue, urging for a relaxation on export restrictions. Moreover, Japan and US trade officials are reportedly considering whether to file a legal case with the WTO regarding China’s rare earth mineral exports. Yet, media reports to this effect have not been officially confirmed by either Japan or the US. In Japan, voices against China’s “ban” on the export of rare earth minerals have been increasing. On October 16, thousands of protesters gathered in a park near the Chinese Embassy in Tokyo. According to Mo Bangfu, a columnist with the Japanese Asahi Shimbun newspaper, political leaders in Japan do not have much leeway in dealing with the trade issue, in light of the increasing anti-Chinese sentiment in Japan. A tough stance is now expected, with Japanese officials likely to seek support from other nations. For its part, Japan has begun preparing for a life without China, and has already embarked on seeking alternative sources from other countries such as Vietnam, Australia and Mongolia. But for now at least, the dispute rumbles on. 


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ECONOMY Group Purchase

The Discount Explosion

Internet-savvy urban customers are fueling a boom in online group purchases, but can large discounts really offer a sustainable business model? NewsChina investigates the phenomena By Yang Zhenglian


n online group purchase coupon initially posted on the morning of October 12 offering a 69 percent restaurant discount attracted over 2,500 price-conscious consumers in the space of just a few hours, selling out almost immediately. The discount was offered at, one of China’s leading group purchasing websites. Other recently advertised discounts have included a 39 yuan hairdressing coupon (regular price 1790 yuan [US$263]), a discount of 97.8 percent. The success of such schemes is corroborated by the website’s own impressive set

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of figures that show how since its launch on March 5 this year, the site has attracted over half a million active users, who together have made savings totaling 182.7 million yuan (US$27.3m). Although it is one of the first websites to offer such discounts, is by no means alone, according to a report by China e-Business Research Center, a third party Internet research institute. By August this year, as many as 1,215 websites across the country were offering group discounts. Products provided by these websites have also expanded from initial discounted offerings

of food, cinema tickets, and entertainment activities to more expensive goods and services such as clothes, cosmetics, electronic products and even large durable consumer goods like cars and houses. While subtly changing the habits of young urban consumers, fierce competition has also broken out between rival websites. However, the promise of evergreater discounts has been passed on to sellers, who now face increasing pressure to reduce profit margins.

The New Trend

When the iPhone4 launched in China on

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“Our company prefers new, untested clients. We often recommend their products to our customers.”

September 25, its Chinese provider, China Unicom, chose’s Shanghai channel to promote the product. The deal provided offered consumers a discount of 300 yuan (US$45) from the mobile’s Unicom contract, while those who took up the offer would also be given a chance to win a free iPhone4. The deal attracted record levels of interest. The limited 160,000 coupons sold out in 42 hours, while traffic of on the site exceeded 1 million users at the peak of the discount window. Yet, this marketing success is only the tip of the iceberg. In June,, another leading group buying website, sold

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300,000 cinema tickets. On September 9, 205 Smart cars with a 33 percent discount were sold in 3 hours and 28 minutes on the group buying portion of, China’s largest online auction and shopping website. The Internet has long provided the perfect platform for so-called “crowd sourcing” schemes, thanks to its unrivaled levels of connectivity. In essence, never have so many people, often complete strangers, been able to come together so quickly. What is true for consumers is equally true for the sellers; the Internet’s large consumer base provides merchants with the pos-

sibility of offering large discounts. With hundreds of websites starting to provide such services, many consumers have become gradually addicted to the thrill of acquiring a bargain, and have begun to forgo many of their daily purchases in favor of group discounts. Zhuo Zi works for a Beijing-based media outlet. As one of the trend’s earliest adapters, Zhuo has been using the site for over six months. She has since formed a habit of purchasing from group buying websites two to three times a week. Her favorite products are movie tickets, cosmetics and restaurant coupons. “It ➥

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really saved me a lot of money,” explained Zhuo. “Many products, such as imported cosmetics were too expensive for me to afford before group purchasing came along, in the past, I wouldn’t even think of buying them,” she said. Checking what’s new on her favorite group buying websites has become a daily habit, often sharing her new discoveries with her friends. With every recommended friend who registers and joins a particular purchase, Zhuo is awarded with a 10 yuan (US$1.5) coupon by the website. However, the most popular discounts sell out almost immediately after appearing online. The trick, according to Zhuo is to monitor the sites closely. The popularity of such sites has meant that most of the major sites are now linked with popular microblog websites, increasing their circulating speed and coverage. Of course, key to the sites’ ongoing popularity is their ability to drive consumer spending. Yet a potentially even more lucrative business model lies in the sites’ ability to attract advertisers. Group buying has allowed advertisers to reach a key young urban demographic at a relatively low cost. This in turn, generates increased profits, that allow for greater discounts to be passed on to the consumer. Most of these websites have now adopted a model that offers one deal a day, with major markets targeting Beijing, Shanghai, Guangzhou and Shenzhen, as well as limited coverage in second-tier cities such as Hangzhou, Changsha and Chengdu. “Each day, we offer an irresistible price and a fun lifestyle. Why not join the purchase?” said Lin Ning, president of While focusing on the low prices, Lin’s team also spends a lot of time carefully selecting potential clients. “Our company prefers new, untested clients. We often recommend their products to our customers.” Lin himself is also a die-hard group


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purchase fan and regularly joins group purchases on his website. Before this year’s Moon Festival, while other group buying websites were selling mooncakes, Lin’s website presented a mooncake DIY project. He and his wife both joined the project and made their own mooncakes. “We took our home-made mooncakes to our parents. I think it was very interesting. It’s part of a new lifestyle.” While group buying websites are selecting suppliers carefully, others are aggregating these websites to provide customers with portals to group buying items. Wang Qiheng founded in May. His website displays numerous products provided on group buying websites both at home and abroad. There are thought to be more than one hundred websites offering a similar service inside China. “I think in one year, group purchase will change China’s current commercial structure entirely. It will overthrow the traditional retail and wholesale channels and restructure today’s business model,” he told NewsChina. As a graduate of Northwestern University in America, the Alma Mater of Andrew Mason, founder of the original group purchase site, Wang Qiheng has high hopes for “crowd sourcing” style economics in China. “In China we have lower labor costs. Meanwhile, the cost in intermediate links is still high.” He said group purchase would facilitate product suppliers to cut the superfluous links so as to lower the price. At the same time, Wang imagines a future where customers would not just passively select products, but where they would also create their own group purchase demand. “When demands have reached a certain number, the group purchase websites could work on these new deals. As the number of participants is known beforehand, service quality could be better guaranteed.”

“I think in one year, group purchase will change China’s current commercial structure entirely. It will overthrow the traditional retail and wholesale channels and restructure today’s business mode.”

The Market Depth

Theoretically, it costs as little as 100 yuan (US$15) to set up a group purchase website. Free source code and page models are available on the Internet. With no audio or video, no large storage capability is needed. The business model is simple, and most importantly, it makes money. But while countless new websites scrambled for users, large established online media portals were preparing to launch their own versions of the popular websites. On June 1, Sohu become the first portal in China to open a group purchase channel. On July 7, this was followed by QQ, the largest web portal in China, opening a Shenzhen group purchase site, while three days later, Sina launched its own group purchase channel. However, many of these media giants were quickly outmaneuvered by their smaller more agile business rivals. “Consumers buy products on the websites. Yet they consume through third-party product providers’. The outcome is difficult for these websites to control.” Wu Bo, CEO of, told NewsChina. His webNEWSCHINA I December 2010

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BYNUMBERS 13.8GW site has now grown to take a 20 percent share of the group purchase market, the largest market share achieved by any one site. To him, providing consumers with a satisfactory experience meant investment in human resources. So far, Wu’s company has employed more than 500 people. “The number of employees is expected to exceed 1,000 by the end of this year,” he said. Wu has been quick to expand both his team, and coverage of his website. now operates in more than 100 cities, and Wu’s ambition is to reach 380 cities by the end of next year. Yet Wu still has his worries. In 1999, he founded, which later grew to become a leading real estate portal in China. However, the website was acquired by online media portal Sohu four years later. This time, Wu hopes to make public. Since launching the site Wu has received US$10 million in venture capitalist investment. Yet despite this, Wu still feels threatened by larger media portals. “They’ve only just entered into the market, and I believe they’ve yet to show their hand,” Wu said. Such worries have spurred Wu and his team to speed up their expansion. “My biggest worry is that we are not running fast enough,” he said. “We’d better run faster.” However, Wu is comforted by his belief that the growth potential for group purchase remains huge. Such a belief is shared by Wang Qiheng, the founder of When Wang travelled to Guilin, one of the biggest tourist cities in southeast China, in early October, he was shocked to discover that most locals had never heard of the concept of group purchase. Wu suggested that newcomers to the market should focus on smaller cities or specific areas, “there are still plenty of opportunities.”  (Rewritten by Yuan Ye) NEWSCHINA I December 2010

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World’s top 10 cumulative installed capacity by 2009

The total capacity of wind turbines installed in 2009, increasing national output to 25.8GW making China the world’s second biggest producer of wind energy. Total capacity is predicted to reach 230GW by 2020, equaling the output of 13 Three Gorges Dams.

25.8% The percentage of South Korea’s foreign trade volume represented by trade with China in 2009, a 7.4 percent increase since 2005. Trade with the United States accounted for 12.2 percent, lagging behind the EU (18.3 percent) and Japan (13 percent). Source: The Ministry of Knowledge Economy (MKE) of the Republic of Korea

(MW) (% share of the total) US 35,064 22.1 China 25,805 16.3 Germany 25,777 16.3 Spain 19,149 12.1 India 10,926 6.9 Italy 4,850 3.1 France 4,492 2.8 UK 4,051 2.6 Portugal 3,535 2.2 Denmark 3,465 2.2 Rest of World 21,391 13.5 Source: Global Wind Energy Council



Price paid by China’s third largest Stateowned oil company CNOOC for a 33.3 percent stake in Chesapeake Energy’s Eagle Ford shale project in Texas, China’s second foray into the US oil industry since the failed bid for Unocal in 2005. The deal seen as a test of US perceptions of Chinese investment in domestic industry, and is expected to be closed before the end of this year.


Source: CNOOC


China’s total foreign exchange reserves by the 1.5tn end of September, with 2007 US$194bn accumulated in the third quarter alone. The appreciation of other major currencies against the dollar contributed approximately 0.8tn 2005 40 percent of the increased amount of foreign exchange reserves between July and September.

2.4tn 2009

Source: State Administration of Foreign Exchanges

6years The time China’s proven gold reserves can supply its domestic demand, according to chief executive Aram Shishmanian of the World Gold Council. Source: 21st Century Business Herald

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ECONOMY State-Owned News Organizations

Split Personalities

Having always relied on government funding, State-run news websites are now being urged by the authorities to become financially independent. But how will these websites strike a balance between adhering to the Party line and making profits? By Chen Dongyi and Zhou Hao


ll news organizations in China are owned by the State. Traditionally, many government-run organizations haven’t had to face the challenge of turning a profit because their funding is largely underwritten by central or local governments. However, times are changing. After years of commercialization leding to the success of privately-controlled media, the State is now calling for officially run digital media organizations to become financially independent. News websites such as and are two notable examples. The reform is deemed justified by the fact that thousands of Party-owned media organizations across the country devour huge amounts of funding from State coffers. Moreover, the decades-long practice of State funding has made these news organizations less competitive and appealing compared with other domestic portals such as At the forefront of the ongoing reform campaign is the task of making key news websites go public on the stock market, including and, respectively controlled by the State media Xinhua News Agency and the People’s Daily newspaper.

Holding the Party Line

More than a decade ago, a few media companies such as Chengdu B-ray Media Co Ltd started to float shares on the stock market. Only assets such as advertising, distribution and circulation were listed, while editorial remained firmly in the hands of the authorities. The arrangement was made out of considerations aimed at safeguarding the “political correctness” of news and broadcasting, but the restriction also dented investor confidence in the media sector. According to sources from, reportedly


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the first website to be approved by the Publicity Department of the Central Committee of the Chinese Communist Party to float A-shares, the website is likely to get listed as a whole, meaning both its operational and editorial arms. Tsinghua Media Survey Lab Director Zhao Shuguang noted, “If editorial can be opened to market capital, it will be a breakthrough for China’s media sector.” “The listing of is very likely to follow the previous integrated listing mode of privately owned portal websites such as and,” Zhao continued. “It is clear that the authorities are hoping to break the bottleneck in the reform of the country’s culture sector [press and publication areas included].” While capital from diverse sources is expected to be introduced into what was classified a “politically sensitive” industry, relevant regulations were hammered out to strike a balance between political correctness and commercial operation. According to the rules issued by the State Council, websites, having been transformed into companies, should establish an “editorial policy committee” that is supposed to ensure that the content of the website is in-keeping with the Party line. In addition, the rules say non-State capital is forbidden to participate in the pre-listing reform of these news websites. The organizations that directly run the websites, Xinhua News Agency and the People’s Daily in this case, should have a controlling stake of no less than 30 percent in the listed websites. was the first to transform itself into a share-holding company starting June this year, with investment mainly coming from the People’s Daily and Global Times. The rest came from China Publishing Group, China Film Group Corporation and Shang-

“If editorial can be open to market capital, it will be a breakthrough for China’s media sector.”

hai Media Group, each holding approximately 1 percent equity in the newly established company. Reportedly, the website was also planning to make State corporate giants like China Mobile and Sinopec its strategic investors. According to media reports, thanks to arrangements made between news and securities regulators, at least one or two officiallyrun news websites are scheduled to debut on the domestic stock market before the end of this year. Yet the websites themselves appeared very cautious about the listing, and refused to disclose any additional information. “News websites are the most difficult type of websites to operate in China,” said people. com President He Jiazheng. According to him, listing is a complex task, involving reforms in assets management, personnel and business adjustments, so “it takes time.” Gao Nan,’s assistant president, simply declined to comment on any timetable for his company’s public listing.

Market Challenges

Online traffic is the key to the survival of any website. In this regard, the governmentowned news websites seem to be less appealing to news readers than other web portals. NEWSCHINA I December 2010

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Illustration by Wu Shangwen

According to a NewsChina survey among a total of 198 college professors and students, only 12 out of those surveyed chose Xinhua as their primary source of daily news. The rankings at Alex positioned at 208th among all of the Chinese-language websites currently hosted within the country, compared with Sina’s news channel, which ranked in 16th place. “It is a very challenging market for Xinhua,” said Director Zhao of Tsinghua Media Survey Lab. “The figures indicate that the website is unpopular among Internet visitors. It is an impasse.” Reformers seem to have foreseen the business pressure that will bear on the as yet unlisted websites, so they allow for a five-year transition period during which the news websites are still entitled to State subsidies as well as tax breaks. “If such websites fail to develop a competitive edge both financially and editorially by taking advantage of favorable policies, they will lose their attraction to shareholders, and will likely get bogged down in the technical side of capital operation,” said Zhang. The operators of these websites are apparently doing their best to ignore this gloomy prospect. For example, Xinhua News Agency reached an agreement with China Mobile in August to jointly explore the mobile search engine market in China. Analysts believe that Xinhua’s news-gathering network across the globe as well as its recent development of its TV news wing will be a key boost for the future of However, such development requires a huge amount of investment, which could help provide an explanation why xinhuanet. com is the first to get the go-ahead for fund raising by floating shares. 

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n its heyday in the 1980s, the Sanjiang shoe factory in Chengdu employed over 300 employees, and boasted a monthly production of over 10,000 pairs. Now, with only three workers remaining, the factory has a daily output of just five pairs. Huang Xiande, 55, the factory’s last male employee, is to retire at the end of this year. With a history spanning over 70 years, Sanjiang shoes were once worn throughout China. The popularity of the company’s shoes was due to their innovative and unique design. The soles of Sanjiang shoes are made from 28 layers of cloth, giving rise to them being named qiancengdier or “onethousand-layer soles.” In order to create a pair of Sanjiang shoes, the cloth used is first soaked, pressed, dyed and ironed. As a skillful shoe maker, Huang is saddened by the factory’s demise, and his inability to find anyone willing to take over his craft. “The shoes are sold at the cheap price of 35 yuan (US$5), yet each pair requires significant time and energy, and so it’s impossible to attract young people to work here.” When Huang leaves, so too will the last pair of shoes. “When I go, the factory will have to close,” he explained. An antiques collector has already come to view all of the equipment used during the shoe making process. “He is waiting for the day we close,” Huang said with disappointment. Mr. Tian, 83, is a regular customer, and recently bought three pairs. “Their shoes are well-made, soft and comfortable. One pair can be worn for years,” he said. Another man, 40, recently ordered 50 pairs. “People are growing nervous that soon they won’t be able to buy the shoes anymore,” said Huang. 

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Clockwise from bottom left: The sole of each hand-sewn shoe comprises over twenty separate layers; the process of soaking the shoes’ outer covers; Huang Xiande, 55, the last of the factory’s highly skilled veteran cobblers; the factory’s cat remains vigilant. Rats are a constant menace in the old factory building.

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➥ NEWSCHINA I December 2010

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Clockwise from top left: Regular customer Mr. Tian, 83, arrives at the Sanjiang factory; completed shoes left out to dry; one of the factory’s last female workers inspects the fabric; shoe making debris litters the factory’s living quarters; traditional shoe moulds

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NEWSCHINA I December 2010

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NEWSCHINA I December 2010

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ENVIRONMENT Emissions Reduction

“Beyond our Reach”

During a recent UN Climate Change Conference in Tianjin, NewsChina met with leading Chinese climate change expert Zou Ji to discuss China’s ongoing drive to reduce green house gas emissions. By Wang Yan


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throughout the country. NewsChina: During the Tianjin conference, Xie Zhenhua, China’s leading negotiator for climate change and vice minister of the National Development and Reform Committee, made it clear that great efforts have been made by China, the world’s biggest emitter of greenhouse gases, to curtail emissions over the coming recent years. According to Xie, in order to meet the target of improving energy efficiency by 20 percent during the 11th Five-year Plan (20062010), the Chinese government has invested over 200 billion yuan (US$3b) in energy efficiency and environmental protection. What is your view on China’s current target of reducing energy intensity (energy consumption for a given amount of GDP) by 2010, and its longer term commitment to reducing carbon dioxide emissions? Zou: It’s difficult. We have set very ambitious goals (for 2010 and 2020) for ourselves. It is rather a political decision. The fact is that our research capabilities are generally a bit too weak, taking into account the status quo of the academic circles, government think tanks, and private research

Photo by IC


hina has a history of disdainfully dismissing Western criticism of its environmental policy. The country’s decision to host a recent UN sponsored International Climate Conference in Tianjin suggested a possible shift in tact. However, the event served as little more than an opportunity for international experts to swap opinion, and international skepticism of China’s pledge to reduce CO2 emissions remains. With this in mind, we met with Zou Ji, director of the World Resources Institute (WRI) and a professor specializing in environmental economics and management at Renmin University of China, to discuss China’s environmental policy, and the many challenges now facing the country. Zou served as a key member of China’s negotiation team at UN Climate Summits for a nine year period between 2000 and 2009, and was recently named a coordinating lead author for the next assessment of a report by the Intergovernmental Panel on Climate Change (IPCC). His research group at Renmin University is now focusing on the development plan for building up low-carbon provinces and cities

“If we let China slip backwards into the “low-carbon” 1980s, and potentially further, consuming much less, riding bikes and all, the emissions could be cut by 60-70 percent.” NEWSCHINA I December 2010

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Two cooling towers are demolished in a controlled explosion in Xinxiang, Henan Province in late 2009. Under the central government’s emission reduction targets, many provinces started a whole sale closure of factories and power plants.

institutions. So the goals were not set on a solid foundation of research and analysis. Instead, the targets were set in a rush and they are therefore beyond our reach. Moreover, the Chinese economy has developed at a record pace, with heavy chemical and polluting industries prospering during this time. China’s economic development depends, and this was especially so for the mid-years of this decade, on metalNEWSCHINA I December 2010

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lurgy, petrol chemistry, construction materials and cement production. For example, during these years, the annual increase of new thermal power capacity installation increased by 100 million kilowatts annually, higher than any increase in the previous decades. However, the energy demand increase was also unexpectedly huge. Under such circumstances, energy saving and emissions reduction are extremely hard to

achieve. These two factors, the over-ambitious reduction goal and the abnormally fast growth, have made it difficult for us to first meet the quota of 20 percent emission reductions by the end of this year. Theoretically, the long term goal of 4045 percent emission reduction should be formally approved by the National People’s Congress (NPC) and written into the 12th Five-year Plan (2011-2015). However, ➥


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NewsChina: In August, in order to cut emissions and lower energy consumption, the government ordered more than 2,000 highly polluting, unsafe or energy inefficient plants to shut down within two months. Do you have any follow-up research or analysis on this? Zou: In my view, we should urge that the problem be resolved by market mechanisms, or through economic measures. We should resort to taxation in dealing with polluters, or apply a system of carbon emissions trading. The government’s shutdown offers only a temporary solution. NewsChina: Emission reduction relies on industrial restructuring and technological upgrading, among other factors. Do you think there will be any progress in the negotiations involving technology transfer during this year’s UN climate conference? Zou: We’ve done research and data collection among the country’s six major industries: power, transportation, construction, steel, cement and petro-chemicals. We found that we (the Chinese) have mastered only 62 out of a total of 388 different kinds of core technology available to tackle


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Photo by Liu Zhen

the central government released this goal to show its dedication to emission reduction before the Copenhagen summit in late 2009, and although it remains possible for China to achieve this goal, there are other issues we should consider first. If we let China slip backwards into the “low-carbon” 1980s, and potentially further, consuming much less, riding bikes and all, emissions could be cut by 60-70 percent. But we should ensure that people’s lives keep improving and that urbanization continues. We should let more rural people enjoy flush toilets, convenient transportation and good medical treatment. Thus more resources and energy are sure to be consumed. To achieve the government goal of a 40-45 percent reduction in CO2 emissions by 2020 over the 2005 level, the respective extra costs in the following ten years will rise as high as US$30 billion per year. To achieve this, we should take various measures including technology improvement, and the readjustment of energy structure, such as adoption of nuclear power, hydro power and natural gas.

Professor Zou Ji

emissions reduction. China and other developing countries are in need of technology transfers from the developed world. But the negotiations on the technology transfer have always been slow. The so-called technology “transfer mechanism” and “capacity building” listed in the negations agenda are ambiguous in meaning and should be more clearly defined. During my time as a delegate at climate negotiations, I’ve seen little progress. Developed countries are generally lukewarm about the issue, and have offered little in the way of concrete

assurances or assistance. NewsChina: In the past two years, “lowcarbon cities” have mushroomed across the country. Yet this phenomenon is regarded by many experts as impulsive and ineffective. What’s your opinion? Zou: The notion of a “low carbon economy” has become a policy priority within China, and has even been referenced in speeches by Hu Jintao. But first of all, we need to clarify that the development of a so-called low-carbon culture, does not run counter NEWSCHINA I December 2010

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local situations, not to mention resources endowment, dictate that there should be no unified and universally applicable set of goals or solutions for all localities. The environmental goals of a local area need to be decided by local people themselves, according to local situations. The central government, or international think tank can provide them with guidelines or support, but we should respect local people.

Emission Cut Efforts and Achievements (2006 to 2009): China’s government allocated

128.5 billion yuan ($18.9 bn) between

2006 and 2009 for energy efficiency and environmental protection projects. Small thermal power plants with a total capacity of

60 million kilowatts


87.12 million tons of steel, 60.38 million tons of iron and 214 million tons of cement Inefficient factories producing a combined total of were also phased out. (Source: the National Development and Reform Committee) to the interests of society. Mitigation of and adaptation to climate change are closely related to human development. All countries must define their lowcarbon policies based on their specific national conditions. An overly fast or drastic cut in carbon emissions could pose grave challenges to China, as the country is also struggling to alleviate poverty and cope with enormous employment pressure and fast-expanding urbanization. It is also faced with the urgent issue of how to better boost energy efficiency in the context of an over NEWSCHINA I December 2010

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reliance on coal, and weak technological and innovative capabilities. In years to come, China will need to pursue a growth model that is simultaneously both low-carbon and economically prosperous. At the same time it needs to diversify its policy options according to the different regional needs within the country. However, to our surprise, many localities are incorporating the national emission reduction goal of 40-45 percent into their own targets. This is by no means logical or practical. Widely diverse and different

NewsChina: What procedure is involved in becoming a writer on the Intergovernmental Panel on Climate Change (IPCC) report, and what is your role in the drafting of the fifth IPCC assessment report? Zou: The IPCC have selected 831 authors from across the world for its fifth assessment report, and the report is scheduled for completion by 2014. This time, the Chinese government recommended a total of 190 Chinese experts to the IPCC, among whom 44 were selected in the final list, I am one of them. The experts are divided into three working groups: one group works on the physical science; the second group works on the impact of and adaptation to climate change and human society’s vulnerability; the third group works on mitigation response strategies. Professor Robert Stavins from the Harvard Kennedy School and I are named coordinating lead authors (CLA) for the report’s chapter on international cooperation and agreements, which is the area of expertise of the third group. The topic relates to the evaluation of international climate management mechanisms, and international climate management innovation. In the following five years, I will focus my energy on this and related international policy issues. Indeed, China lacks research input and experience. If the country wants to play its role as a leader in the arena of international climate change, we need to strengthen our research. Able to work together with the most influential scholars and researchers from all parts of the world, I am very proud to be involved in such a project. This time, the involvement of the 44 Chinese experts in the IPCC report will definitely be very important to China in international negotiations. 


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CULTURE Oral Histories

The Other Side of the Story Top talk-show host Cui Yongyuan has spent the past eight years recording the reflections and memories of over 3,500 Chinese men and women in an effort to document a vanishing past. By Yang Shiyang and Yuan Ye

Photo by Zeng Hongge


Cui Yongyuan


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riting Chinese history has long been a privilege of the victor. New dynasties would defame the preceding regime to secure legitimacy, only to be discredited by successive rulers. The defeated, the disgraced and the unimportant have failed to find a voice in State annals. Not so in recent years. The information age has derailed the centralized narrative of China’s history and provided people with access to an increasingly varied range of viewpoints. The pursuit of a people’s history has been taken to a new level by talk-show host Cui Yongyuan, one of the most revered figures in China’s entertainment industry. Cui, 47, has been working for China Central Television (CCTV) for more than a decade and a half. He has now amassed funding for a 60-strong private TV crew to systematically document modern China’s history through recorded interviews. In eight years, Oral History has documented the testimony of more than 3,500 people, including war veterans, retired government officials, bluecollar workers, entrepreneurs and artists. The project has already cost 130 million yuan (US$19.5m), with little financial return, and rumors circulating that the crew has gone unpaid for months. Cui shot to fame in 1996, hosting the talk show Talk the Truth, which soon topped the ratings for its bold topics and Cui’s humorous, relaxed but sharp style, which spawned a raft of copycat shows across the local networks. However, at the zenith of his career, Cui withdrew from the public eye in 2002 NEWSCHINA I December 2010

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Poster for My War of Resistance

and was soon diagnosed with severe clinical depression, which he had previously battled for a number of years. He made his comeback in July 2003 with a new talk show, yet people found him a shadow of his formerly effusive and probing self. Cui continued to struggle with his illness, and saw historical research, a subject which fascinated him despite his association with current affairs, as a workable form of therapy. In 2004, Cui’s documentary debut, a series about Chinese film history, was aired on CCTV. The documentary chronicled Chinese cinema from its birth at the beginning of the 20th century, through WW2 and the Chinese Civil War and after the founding of the People’s Republic. The series ran until 2009 and, in conducting interviews with key figures in Chinese film history, Cui

“Initially I only wanted to document the artistic history of film. However, when we started interviews, I began to realize that we were instead documenting its political history.” NEWSCHINA I December 2010

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was inspired to embark on a more ambitious project. “Initially I only wanted to document the artistic history of film. However, when we started interviews, I began to realize that we were instead documenting its political history,” Cui told NewsChina. Cui found that aged interviewees would often deviate from film making to discuss the historical background to certain films – the art policies of the Party and the countless political campaigns which determined the direction of art in China for almost a century. “I found those insights particularly valuable. Therefore I decided to let interviewees loose and document entire life stories,” said Cui. Cui’s Oral History spans four areas of discussion: China’s foreign relations and Chinese people studying abroad, veterans’ war memoirs, an oral history of the People’s Republic of China and the development of Chinese cinema. My War of Resistance, Cui’s completed 32part documentary series on the Sino-Japanese War has so far only been screened online, adding to rumors that Cui’s relations with CCTV have soured in recent years. Yet Cui denies these allegations. In fact, he said, he didn’t want to have the new documentary broadcast at all. “To cut those interviews into 30-minute episodes was really painful,” he said. He also added that some content could not be broadcast due to its political sensitivity. Cui has signed confidentiality contracts with many interviewees requiring their accounts to only be made public after their death, despite his burning desire for his interviewees to see

the public response to their testimony. He is also worried that time is outpacing his project, with crucial witnesses to historic events dying before his team can reach them. Despite overseas interest in the material Cui’s eight-year project has amassed, its creator is reluctant to see his work go abroad. Cui has rejected offers from Columbia University to buy his archive for several million dollars. His response, “I won’t sell. But people are welcome to consult my work anytime.” NewsChina caught up with Cui to ask him about the future of his magnum opus. NewsChina: On what basis did you choose the four focal areas of Oral History? Cui Yongyuan: They were my suggestions. Only personal interest makes a project sustainable. Our lead reporters were especially interested in social development, international relations and war. They even took an interest in weapons. We proceeded organically from one category to the other. NewsChina: How did you select interviewees for My War of Resistance? Cui Yongyuan: We had a map showing the front line and the battlefields behind enemy lines. We needed a clear idea of troop positions and who was in charge of what. Once we had the overall picture, we started the search for interviewees. Once they began to talk, they talked about everything, and from the very beginning. It couldn’t be helped. This was Oral History after all. We once had a guy who kept talking for two months. Then one inter- ➥


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Cui Yongyuan in Chongqing, promoting My War of Resistance Photo by IC

viewee might give you a whole bunch of names of people who also had stories. NewsChina: Did you require reporters to work out an interview plan in advance? Cui Yongyuan: There were no advance plans. What I told my lead reporters was this: just go and listen to the stories. Try hard not to interrupt. Let them speak freely. We interviewed Zhang Xueliang [a former Kuomintang general who briefly took Chiang Kai-shek prisoner in 1936] 125 times, and he did not allow any questions. This is a requirement of recording oral histories: comprehensive and unrestrained narration. We were only recording what they said. NewsChina: Did you require your interviewers to intentionally tone down propagandizing when conducting interviews? Cui Yongyuan: We had no need to do that. A personal narrative is an account from one perspective. Personality is branded on every individual and cannot be erased. What is war? We habitually think of cold steel, indiscriminate bombing, and assassinations. But in fact, war also means small businesses, prostitution, cabarets and scholarly pursuits. This is the ecology of war. There is little difference between the environment today and that in wartime: each day brings its own temptations and presents you with a choice. If you became a collaborator during the Japanese occupation, for example, and could escape assassination, your life would immediately become easier. Collabora-


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tion was tempting. We face temptations and choices in 2010, and these daily trials haven’t changed. NewsChina: Were you ever turned down by interviewees? Cui Yongyuan: Yes. I think some people are still scared of political campaigns. There was one person that I met twice. The first time we talked, everything was great. He promised to give accounts of important events the next time we met. But at our second meeting I saw he was in a really bad mood, sitting sullenly before saying, “just let everything go rot in my head.” I hated to do it, but I had to give up. But sometimes it was the opposite. One old man, for example, after a long bout of illness, said to me: “Just come over and I’ll tell you everything.” It was sometimes quite difficult to get all the interviewees to embrace this project as academic. Once they saw me, or heard the name ‘Cui Yongyuan,’ their conditioned response was: it’s CCTV, it will be broadcast nationwide, it will impact negatively on me. So my fame sometimes had an adverse effect. NewsChina: Were there any things that you didn’t want to confront when shooting Oral History? Cui Yongyuan: There were too many. In Incheon, Korea, I went to the Korean War Museum and saw a photo that shocked me. It showed American soldiers pointing their guns

at a group of Chinese Volunteer troops like this [raises his arms in a gesture of surrender]. In China, we’ve only seen American troops surrendering. But this time, it was us. A sense of humiliation grabbed me, but for only a second. That’s history. NewsChina: How many of the interviews did you do personally? Cui Yongyuan:  Less than 40. I had two major responsibilities. First, I had to raise the money for the budget, as CCTV isn’t investing in this project. Second, I had to show up for investor meetings from time to time, because people didn’t believe that it was me doing this. After I showed my face, dinners would be held and contracts signed. NewsChina: You have so far refused to sell your material to academic institutions and commercial TV stations. Where would you like to see Oral History exhibited? Cui Yongyuan: Let me describe an Oral History Archive. When you first go in you see a wall of video screens, and one hundred people are talking up there. There will be touch-screen computers. When you put on earphones, you can listen to the specific person of your choice. You have a wide range of choices, the war, film, music, just click. Text, photos and videos are all there. Real relics will also be on display. For example if you want to see Red Army slogans from the Long March, or their hand grenades, or if you want to see Republican era silver coins, it’s all there.  NEWSCHINA I December 2010

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HISTORY Zhang Jingsheng

China’s Kinsey Facing widespread condemnation from the conservative elite, Zhang Jingsheng pioneered sex education and sexology in the early 20th century. By Xie Ying


espite 30 years of economic growth transforming almost all aspects of Chinese life, sex remains a taboo subject throughout society. A “don’t ask, don’t tell” attitude to sexuality encouraged by the government, the education system and the official media has ensured that frank discussions about sex remain off the agenda for all but the most liberal circles. However, some pioneering educators have sought to buck this trend. Sociologist Zhang Jingsheng, one of China’s earliest advocates for sexual freedom and author of the controversial book The History of Sex, remains a divisive figure in a country deeply conflicted by sexuality. Born in 1888 to a rich rural family in Guangdong, Zhang rebelled against his father’s expectations that his son might become a member of the gentry. Instead, he left home to join the democratic revolution of Sun Yet-sen, which successfully toppled the Qing monarchy in 1911. The new government sent Zhang to France, then a training ground for Chinese revolutionaries, in 1912. During his seven-year stay, he led a bohemian life which stirred a fascination with Western aesthetics and would determine the direction of his future studies. Zhang came back to China on the eve of the “New Cultural Movement,” commonly referred to as China’s Enlightenment, a nationwide rejection of China’s traditional arts and philosophies. Confucian doctrines and ideas seen as synonymous with the country’s “feudal past” came under particular attack. Zhang’s educational background and his NEWSCHINA I December 2010

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Photo by Fotoe

‘Doctor Sex’

Zhang Jingsheng

avowed dedication to the movement landed him a teaching job at Peking University, then a rallying point for contemporary intellectuals including writers Chen Duxiu, Hu Shi and Lu Xun. Zhang’s lectures on aesthetics, sexology and romantic love became a smash hit with students. His Epicurean pamphlet Outlook for a Beautiful Life, extolling the pleasures derived from good food, fine clothes, comfortable housing and regular sex, was widely circulated on campus and praised by leading intellectuals. One contemporary writer commented: “Zhang Jingsheng’s works stand out from others for their daring exploration of taboo areas. How exciting that he energetically advocates life’s pleasures in our morbid society policed by moralists.” Zhang had only just got started, and was soon pushing the boundaries of the movement itself. In 1926, he took out an ad in the Beijing Newspaper inviting contributions from ordinary people relating individual sexual experiences. Such blatant questions as “when was the first time you experienced sexual desire?” or “have you ever slept with a prostitute?” soon caused a flood of responses. He selected seven pieces and had them published in a book – The History of Sex (Volume I), predating Michel Foucault’s identically-titled masterwork by half a century. An article by his second wife Zhu Wenjuan entitled My Sexual Experience was also included in the book. In his preface, Zhang stated “we should view sex as a subject for study, or an art.” He wrote frank commentaries on each submission, instructing people on the improve- ➥


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ment of their sex lives, encouraging frequent sex and offering suggestions as to how a wife might arouse her husband. The book was an instant hit, with copies soon unobtainable nationwide. On its debut at Shanghai’s Guanghua Bookstore, such a large crowd of people clogged the street that police had to clear the sidewalk with water cannons. In Guangzhou, the Minguo Daily reported that almost all local students had read Zhang’s book. “They are so fascinated with this book it’s as if they were drugged,” ran the report. However, despite its enormous popularity, The History of Sex outraged educators and public figures and soon sparked a wave of vitriolic criticism. Four months after its publication, Zhang Boling, then president of the prestigious Nankai University in Tianjin, called on the local police to seize all copies of this “pornographic book” which was “poisoning young people’s minds.” His protest eventually led to a complete ban, first in Tianjin and later the whole country. Under overwhelming pressure, Zhang Jingsheng had to cancel plans to reprint his work, and curtail publication of subsequent volumes. However, pirate copies of the first volume were already circulating illegally throughout the country. Worse still, fake sequels to The History of Sex were flooding the market. Zhang soon earned the nickname “Doctor Sex.”

Beauty Bookstore

The controversy surrounding his masterwork


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made life in Beijing hard for Zhang. When Cai Yuanpei, the liberal president of Peking University, was relieved of his post, Zhang lost his final high-level defender. He moved to Shanghai and opened the Beauty Bookstore, publishing and selling books on sex education, religion, ethics and the arts. However, another book entitled The Third Water, in which Zhang discussed female orgasm, female ejaculation and the importance of sexual satisfaction to women’s emotional health soon landed the author in hot water. With British sexologist Henry Havelock Ellis’s works dominating sexual discourse among the cognoscenti, Zhang saw a window in the market and published his works in short, digestible volumes with provocative covers often featuring naked women, making his books instant bestsellers. Zhang also exclusively employed young and pretty female clerks, against the established practice of Chinese stores at the time rarely employing women.

Such business practices gave further ammunition to Zhang’s critics, who labeled the Beauty Bookstore an “obscene place” for “good-for-nothing” people to buy The Third Water from “seductive temptresses.” Even fellow sexologists such as Zhou Jianren and Pan Guangdan condemned The Third Water as “unscientific” and “licentious.” Despite its popularity, the Beauty Bookstore operated at a loss and failed to gain patronage from a liberal establishment increasingly disturbed by Zhang’s opposition to the mainstream. The store closed after less than two years, adding to the pressure on Zhang to give up his crusade. According to Another Aspect of Literary Men by Wen Xinchuan, a Chinese writer who was one of Zhang Jingsheng’s contemporaries, Zhang became involved in no less than 10 lawsuits connected to the bookstore. When Zhang took a vacation to Hangzhou, Zhejiang in 1928 after his business was shut down, he was arrested by local police on charges of “sexual instigation” and later deported from the province.

Too Progressive

Even fellow sexologists such as Zhou Jianren and Pan Guangdan condemned The Third Water as “unscientific” and “licentious.”

“Love is conditional, changeable and comparable, and matrimony a kind of friendship.” Zhang announced his concept of love in the periodical Supplement to a Morning Newspaper in 1923 when the public unanimously criticized Professor Tan Xihong of Peking University for marrying Chen Shujun, his deceased wife’s sister. Zhang came to his defense, vigorously extolling the “freedom of NEWSCHINA I December 2010

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Margaret Sanger (18791966), the US birth-control pioneer, is invited by Zhang Jingsheng to give lectures at Peking University; Opposite page, cover of Zhang’s The History of Sex

Photo by Xinmin Evening News

love.” His unconventional ideas triggered a massive public debate on romantic love, the first of its kind in China, where arranged marriages remained the norm. Zhang opposed breastbinding and promoted coed schools and even skinny dipping. He encouraged birth control as a solution to the population explosion as early as the 1920s. He presented a proposal to warlord Chen Jiongming, then military governor of Guangdong, to implement a comprehensive family planning policy, only to find himself suspected of being psychotic. “I’m afraid that Zhang Jingsheng’s vision won’t come to pass until the 25th century,” Lu Xun, China’s most prominent writer at the time, remarked in an essay. Zhang’s ideas were revolutionary by any contemporary standard. According to his biographer Zhang Peizhong, Zhang was the first Chinese to translate Henri Rousseau’s Confession and the first to introduce the Western science of logic to Chinese universities. He helped spread agricultural knowledge in his hometown and appealed for peace between the warring Kuomintang led by Chiang Kai-shek and Mao Zedong’s Communist Party during the Chinese Civil War. NEWSCHINA I December 2010

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Yet, such efforts and deeds were overshadowed by his controversial promotion of sexual freedom. While his contemporaries like Li Dazhao and Lu Xun gained accolades for disseminating Marxism or promoting “new culture,” Zhang was labeled a “philanderer.” “My father was born out of his time,” Zhang Chao, Zhang Jingsheng’s second son, told media in 2005. “In a society just emerging from feudalism, his ideas were offensive to many people.” Zhang’s reputation for unorthodoxy pursued him for the rest of his life. Despite being in his late seventies, he was banished to the countryside and shut up in a dilapidated, windowless hovel until his death in 1970.

Although Zhang was posthumously rehabilitated in the 1980s, he remains recognized primarily for his contributions to philosophy rather than sexology. Sex remains a sensitive topic in Chinese society, and the open discussion of sexuality in all but the most clinical terms can cause writers and academics to fall foul of strict anti-pornography laws. Zhang’s biographies and selected works are easily found in mainland bookstores, but his masterworks The History of Sex or The Third Water remain unseen. Despite calls for more comprehensive sex education in schools from some quarters, some high schools are already following the lead of American schools with “abstinencebased education,” an approach which has met with little success in reducing teen pregnancy and underage sexual activity in the US. However, a comprehensive, national sex education curriculum is seen by liberal academics both in China and abroad as crucial to the success of any attempt to relax the one child policy. Zhang Jingsheng’s era may have passed, but the need for open dialogue about human sexuality in China has never been greater. 


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Photo by CFP


Heshun town with rape flowers in springtime


Distance is Bliss

Thanks to its proximity to Myanmar, the sleepy town of Heshun has enjoyed the fruits of cross-border trade with the Indian subcontinent throughout history.

Photo by CFP

By Deng Xiaoxia


ur airplane circled the Gaoligong Mountains before skimming a final ridge to land in the city of Baoshan where we met a bone-shaking bus which juddered along mountain paths towards our destination - Heshun, a peaceful town in the western wilds of Yunnan Province, less than 100 miles from the Myanmar( also known as Burma) border.

Sea of Tranquility

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The Heshun region has been an important crossing point since ancient times, a crucial hub of the “Tea and Horse Trail” linking China and India. To the east lie the Hengduan mountains, which stretch hundreds of miles

north and south, providing China with its natural western border. During World War II, the place saw fierce fighting between Japanese and Chinese troops. Supported by American fighter squadrons popularly known as the “Flying Tigers” under the command of General Claire Chennault, the Chinese, after desperate close-quarters fighting, eventually prevailed and retook the city of Tengchong, which was left in ruins after heavy aerial and artillery bombardment. Miraculously, however, the township of Heshun, less than two miles away, was spared. In Chinese, heshun means harmony and smooth going. Tucked in a remote alpine valley, the town remains beautifully preserved, and is, as NEWSCHINA I December 2010

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NEWSCHINA I December 2010

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Photo by Yang Zheng/IC

Photo by CFP

its name suggests, a great place to unwind. The township is only 91 miles from Myanmar, a stark contrast to its more than 300-mile distance from the provincial capital Kunming. Ledo in India is only 370 miles away. For Heshun’s 6,300 residents, travelling into Myanmar or even India represents a much shorter hop than a trip to a nearby province. Most locals are descended from immigrants who migrated from Sichuan, Anhui and the Central Plains during the Ming dynasty (1368-1644). Jade, cotton and rice were traditional businesses in the area and many got rich by trading these commodities, and continue to do so today. Locals travel frequently to Myanmar, which abounds in jade resources, to engage in the gem trade. From the air, the town is a patchwork of roofs crisscrossed by waterways. Whitewashed walls and black tiles juxtapose against a backdrop of verdant mountains, making Heshun one of China’s most effortlessly picturesque towns. The streets are paved with volcanic rock which is also incorporated into the masonry. Walking down the spotless alleys on rainy days is a uniquely refreshing experience. A cluster of dormant volcanoes encircle the town. Early in the morning, when the sun rises and casts light beams through the mist on the paddy fields, flocks of egrets dot the skyline. A river gurgles past, separating residential areas from farmland. In July, while the rest of the country sweltered at the height of summer, I reveled in Heshun’s cool, wet climate. Rambling storefronts and home-run hotels wallpaper the ancient lanes, but the ubiquitous advertising hoardings of other rural Chinese cities are thankfully absent in Heshun. Unlike Yunnanese tourist traps such as Dali and Lijiang, travelers can wander across the town free from the attentions of peddlers and hawkers, spared the

principle annoyances of most Asian tourism. Even the passage of time seems to slow down in Heshun.

Old Builds

Arriving after nightfall, I stayed in a newly built house at Heshun’s main gate where I could enjoy the view of nearby farmland and the distant volcanoes. On my first stroll through the town the following day, I was astonished at the richness of the town’s architecture. Homes and public buildings combined Chinese, Southeast Asian and Western elements, with intricately-carved latticed windows typically seen in Myanmar and Thailand, ancestral halls supported by Doric columns, and traditional Chinese flourishes such as black tiled roofs and small arched bridges spanning murmuring brooks. All these different architectural elements blend into an amazing coherence. Attracted by the old architecture, I decided to give up my decidedly modern lodgings in favor of an ancient house for my second night. There are a total of 1,000 old-style houses in Heshun and the neighboring eight villages. We finally chose the Xian Mei He mansion as our new home. Like many locals, the ancestors of Ms Cun, the current owner, started their family cotton business across the border. Within two generations, the Cun family established its own brand of cotton in Myanmar and had amassed a considerable fortune. Ms Cun’s grandfather returned triumphant to his ancestral hometown of Heshun and built two double-courtyard family residences, each with

Left to right, laundry pavillion by the riverside; an ancient courtyard

a floor space of more than 5,000 square feet. Xian Mei He was bequeathed to Ms Cun’s father and the other residence went to her uncle. The two-storied house combines northern and southern Chinese architectural styles and also features some British, German and Southeast Asian elements. Ms Cun related how during the World War II, Japanese troops occupied the county center of Tengchong. Garrisoning the surrounding hills, they saw the Cun family houses from afar and mounted a looting raid but lost their way in the labyrinthine lanes within the town, never reaching the mansions.

Peaceful Life

Heshun’s houses are largely made of “autumn timber” which is insect-resistant and damp-

proof, essential during the rainy season. On a wet July day, I sat sipping tea on the courtyard’s roof terrace, enjoying a view of osmanthus flowers drooping beneath the weight of the drizzle. Heshun’s residents, blessed with a constantly spring-like climate, are mad about flowers, with orchids a local favorite. Potted varieties are often placed in backyards behind studies or at the foot of crescent-shaped, whitewashed screen walls. In the old days of the Horse and Tea Trail, the men in Heshun, being the breadwin- ➥


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ners, were constantly away from home on business. Left-behind wives shouldered the load of household chores and domestic affairs, including doing laundry by the riverside. Grateful husbands chipped in money to build six “laundry pavilions” in order to make the washing easier on rainy days, which still totter on the banks of the river, though Heshun’s residents now prefer washing machines. The town also boasts what is reputed to be the best village library in the country. Built in the traditional Chinese style, the Heshun library was constructed in 1924 and has more than 70,000 volumes in its collections, including many well-preserved rare editions of ancient books. On visiting this treasure trove, I caught sight of a barefoot local boy engrossed in a classic. A perfect metaphor for Heshun – small and rural, but steeped in culture.

Tea and Horses

Yunnan Province is known as the home of black fermented tea, transported in ancient times along the ancient Tea and Horse Trails. This incredible history can be traced back to the Tang Dynasty (618-907) when tea was first introduced to the Tibetan Plateau. Gradually, Tibetan demand for Yunnanese tea leaves increased. During the Qing Dynasty (1644-1911), the tea trade experienced its biggest boom, with locally-produced Pu’er tea making its way to Lhasa, Delhi and Persia. Merchants lured by the profitability of black tea also faced great hardships. Spanning a continent, the Trail stretched over 1,000 miles over some of the most inhospitable terrain in China, along the eastern sections of the Hengduan Mountains and then through deep river valleys before finally reaching Lhasa in Tibet, and then continuing into India. The trails also served as a social and cultural bridge between China and India. Although silk was not traditionally traded along the route, the trails are now called “the Southern Silk Road,” comparable in scale and difficulty to their Northern counterparts. The trail has also had immense strategic importance during World War II. In 1942, with the coastal cities of China and Myanmar occupied by the Japanese army, the trail became a significant transportation link supplying munitions to inland China from India. Nowadays, the Trail continues to serve as a thoroughfare for religious pilgrims, and is


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Photo by Yang Zheng/IC


Inside of an old town mansion.

Transportation: Direct flights from Kunming to Tengchong are now available. Heshun is a six-hour bus ride from Kunming’s long distance bus station, with daily services. In Tengchong, Heshun-bound minivans are available at all hours, but we recommend attempting the journey on a rented bicycle, as the new highway offers stunning mountain vistas. Accommodation: Basic accommodation (clean beds, ensuite bathroom) is available for 2550 yuan (US$3-7). Visitors can also choose to stay in old-style local houses. Newly-built hotels charging 150 to 350 yuan(US$22 to 50) per person are also available inside the town.

dotted with sacred mountains. Khawakarpo near Yubeng in northern Yunnan is one of the most famous sacred Tibetan peaks. Every year many pilgrims from Sichuan, Yunnan, Tibet, Qinghai, and Gansu come here to climb its sacred peak, many bringing along tents, sheep and horses. Due largely to domestic tourists’ fascination with the region’s ethnic and cultural diversity, the Trail has become a major tourist attraction. More than 20 different ethnic groups are found along the route. Some

Local Scenic Spots: In Heshun, places of interest include the Farmhouse Museum, the library, and numerous ancient houses. Nearby Tengchong is famous for its volcanoes and hot spring resorts. A popular saying in Tengchong goes, “Nine out of 10 mountains are headless,” a remark on the number of flat-topped volcanoes. The tallest complete volcano in the park is Daying peak, which rises over 8,000 feet above sea level and is surrounded by over 70 volcanoes of different sizes. Another geological wonder is Dagunguo (Big Boiling Kettle), a mineral-rich spring that reaches temperatures high enough to boil eggs. 30 miles away is Yunfeng Mountain, a sacred Daoist peak which throngs with pilgrims from all over Asia.

famous old towns and villages which once served as key stops and markets along the trails have seen a resurgence thanks to the tourist trade. Lijiang, after being listed as a UNESCO world cultural heritage site, attracts thousands upon thousands of tourists from home and abroad each year, and has become something of a circus, particularly in the summer months. For now, however, Heshun remains aloof from the Disneyland pageantry of other Yunnanese destinations, and remains saturated with the aura of history.  NEWSCHINA I December 2010

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Food of the Month

Basement Buffet By Oscar F Chung

At the heart of Beijing’s new towering business district sits the IFW’s latest restaurant offering an oriental styled fusion buffet. But unlike its nearby competitors, this eatery offers little in the way of dizzying skyscraper views. Located under the Park Hyatt Hotel, the emphasis is firmly on the food. The restaurant’s minimalist arrangement and functional décor serve only to accentuate this point. All the dishes served in the open-plan IFW are prepared à la minute by specialist chefs; indeed, part of the appeal of this unassuming venue is watching the chefs chopping, carving, roasting, frying and steaming at a variety of specialist food stations. On offer is everything from fresh Western and Chinese salads, Japanese sushi and sashimi, steamed meat and seafood, prime grilled beef steaks, lamb chops, salmon loin and Pacific saury, and all kinds of wok-fried seafood, meat and vegetables, as well as baked sea bass.

Learning Chinese


Pro-fan By Kathy Chen There are various measures of fame, but nothing quite beats a boisterous crowd of fans waiting for hours in an airport lounge for a glimpse of their idol, or screaming and weeping in a packed-out concert venue. Few would see such open displays of adoration as anything but sincere, but, in China, all may not be as it appears. The most ardent “fans” might actually be the most skilled performers, with their every move choreographed and rehearsed before the headliner opens their mouth. Meet the zhifen, “professional fan” in Chinese, the young people paid by agencies to boost a celebrity’s public profile. The Chinese entertainment industry has experienced a boom since the 2005 reality NEWSCHINA I December 2010

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During our trip to the restaurant, the fresh selection of cut-to-order sushi was bettered only by a formidable range of healthy and fresh Chinese dishes, including some of the very best Hainan Chicken to be found anywhere in the capital. My personal favorite though, were undoubtedly the succulent baozi or meat filled steamed buns; it’s hard to find good baozi outside of the city’s small street eateries, and so these large tasty buns, filled with fragrant helpings of fresh pork, proved a real treat. However, the restaurant’s real draw is its impressive range of desserts. More fitting of a Bavarian cake shop, the delicious range of pastries, chocolates, cakes and biscuits were complimented by a gushing chocolate fountain and unlimited Italian coffee. Despite, or perhaps because of its basement setting, the IFW restaurant offers a relaxed place to spend several hours, and enjoy the food on offer, and at a cost of 228

yuan (US$34) per person, which includes free-flowing beer and soft drinks, it’s by no means expensive; a perfect choice for those long sleepy weekend mornings. 

show Super Girl achieved record ratings of over 400 million viewers able to vote for their favourite performer with a premiumrate text or call system modelled on American Idol. Many trace the zhifen phenomenon to the profit motive behind most reality talent shows. Zhifen are hired to blog, organize fan clubs and initiate PR campaigns to promote “future stars,” often long before preliminary regional auditions have started. They can come from anywhere, with some genuine fans, professional PRs or events organizers, and some relatives or partners of contestants. Others might be would-be partners hoping to catch an attractive star’s eye with their generosity, pouring personal fortunes into giving them their big break. The salaries of zhifen are almost always commission-based. A recognised standard is 20 yuan (US$3) for holding up a placard, 50 yuan (US$7.1) for shouting “until your throat is sore” and 200 yuan(US$30) for “fainting with emotion.” Full-time zhifen

can also pocket fan club membership fees of 10 to 100 yuan(US$1.5 to 15) per member per year. Commercialization of the music and entertainment industries has been a magnet for speculators hoping to cash in on the next big star, casting doubt on the fairness of national talent competitions. A zhifen surnamed Huang blogged that he had earned over 10,000 yuan (US$1,500) from a TV station that put him in charge of events promotion and news “according to their guidelines.” Huang said many zhifen also launched sidelines in organizing paid-entry fan meetings and selling light-sticks for concerts. Despite widespread opposition to the employment of zhifen, authorities and TV regulators have done nothing to discourage the practice, most likely due to its low cost and high profitability. For now, pro-fans remain a crucial marketing tool of China’s emerging entertainment industry. 


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The Festival that Was


fter revolutionary epic The Founding of a Republic was awarded Best Picture by the 19th annual China Golden Rooster & Hundred Flowers Film Festival in October, public opinion of the State-sponsored film awards plunged to freezing point. Other awards went to films of political purpose or with minor impact, even to films released two years ago. In recent years, as more market-oriented film awards have begun to appear in China, the Golden Rooster & Hundred Flowers awards have seen a rapid decline in influence and appeal. As audience disaffection has gradually become simple indifference, even box-office smashes have become noticeably absent at the awards due to controversial subject matter or even a lack of political influence, making the whole festival something of an embarrassment to its own industry.



New Old Masters Modern yet traditional, an exhibition entitled Pure Views: New Painting from China showcases more than 80 works from 26 of the most renowned contemporary and emerging Chinese painters and runs from October to December in London. Named after a famous Song Dynasty scroll by ink-and-wash painter Xia Gui (1195-1224), Pure Views displays works use western techniques but still reflect the traditional Chinese characteristics and spirits. The goal of the exhibition is to remind Chinese artists of the importance of their traditional artistic heritage. Curated by Lu Peng, the exhibition features some of the most renowned names in con-

‘Buddha on Line 1’ By Li Haipeng

temporary Chinese art, including Chen Danqing, Zhang Xiaogang, Yue Minjun, Wang Guangyi and Fang Lijun.


A Salute to John Lennon

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At the time of his assassination 1980, hardly anyone in China knew John Lennon’s name. 30 years later he and the Beatles are hailed as important influences on the development of Chinese pop and rock. Among the 22 performances at the 13th Beijing Music Festival program in October, the John Lennon Songbook, performed by the Royal Liverpool Philharmonic Orchestra from the UK, was the only one to feature non-classical music. The performance commemorated the former Beatle by performing symphonic and choral arrangements of his songs, earning a standing ovation from the audience.

Line 1 remains the main artery of the Beijing subway, connecting the east and west of the city and is constantly crowded. Journalist and columnist Li Haipeng, famous for his incisive sense of humor has put together a collection of essays named after one of the book’s featured articles detailing observations of commuters. The book has become a bestseller in recent months, and has been hailed as a thoughtful and human perspective on urban life and social issues, without the political posturing which often typifies chart-toppers. The author’s recent pledge to end his essay writing career and focus on writing novels has also boosted sales. NEWSCHINA I December 2010

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Shanghai East International Medical Center Shanghai East International Medical Center (SEIMC) offers vaccination services in the clinic during normal clinic hours, Mon-Fri, 9am-8pm, and Saturday-Sunday, 9am-6pm. SEIMC also offer an on site flu shot services to companies, schools or compounds. Corporate

Ascott Offers You Best Service

CapitaLand’s wholly-owned serviced residence business unit, The Ascott Limited, has launched a “Best Rate Guarantee” initiative, promising the lowest publicly available Internet rate each time a guest makes a booking through any of Ascott’s websites. Guests can now obtain the best rates through any of Ascott’s three brand websites – Ascott (www.the-ascott. com), Somerset (www.somerset. com) and Citadines (www.citadines. com). If a guest finds a lower rate for the same property, apartment type and reservation dates on another website within 24 hours of their confirmed booking made on Ascott’s website, Ascott will honor the lower rate found and extend a further 10 percent discount off that rate. For more information, please visit: guarantee.html. Ascott was named ‘Best Serviced Residence Operator’ for the sixth consecutive year at the TTG Travel Awards 2010.  NEWSCHINA I December 2010

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discounts and reduced rates for groups are available. Since flu season may begin as early as Oct and run through May, SEIMC suggests that the best time to get a flu shot is in Oct or Nov. For more info, please contact Jasmine at (86 21) 58799999-2862 or Julie at ext 2108.

Mark Your Calendar for “Hats Off ” the Gastronomic Grand Event of the year The annual gastronomic “Hats Off ” event is scheduled to return early this November to The Westin Beijing Financial Street. Four internationally acclaimed master chefs have been invited to showcase their culinary skills by presenting four distinctive and carefully crafted dinners. In particular, food lovers in the awardwinning restaurants Prego and Jewel will enjoy close interaction with these chefs, with opportunity to personally experience the creative process before indulging the delicacies. For more information, please visit Or inquiry: 8610-66068866

The World’s Largest Thai Dinner by Marriott International Hotels In Guinness World Record style, 17 Marriott International Hotels in Thailand, together with over 3400 Marriott International Hotels around the world banded together on Wednesday 20th October 2010 to host the World’s Largest Thai Dinner. Marriott International Hotels worldwide held Thai dinner parties in their restaurants, ballrooms and filled up local Thai restaurants. Marriott International Hotels in Beijing and Tianjin hosted a “Destination Thailand” themed dinner party on 20th October at Beijing Marriott Hotel City Wall. The evening was supported by the Royal Thai Embassy and Marriott Thailand Hotels, immersing the honored guests in the richness of Thai cuisine, cultural performances and customs.

CITS Inbound Tour B2B Website Launched China International Travel Service Limited, Head Office (CITS), the first travel agency catering to overseas tourists in China, has launched its B2B website targeting at overseas business partners. The website is aimed at inbound group tourists, and covers regular tours, special Interest tours, adventure tours, business forums or formulization inspection tours, governmental tours, incentive & conference tours, educational training or study programs, science and technology exchange programs, VIP or application for special treatment, luxurious packages, and exploration tours.

Chinese Club With the new VIP center,Yintao Golf Club, Mandarin Garden delivers a wide range of services including Mandarin class, gym, club life, golf exercise. It is a traditional golf club with modern standards that takes a relaxed and welcoming stance towards new friends. Our students can relax and unwind, and enjoy the attractive surroundings and friendly atmosphere of the clubhouse. For more information, please visit Hotline: 400-600-2922

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One Hundred Things Only By Qi Zhai


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I doubt quasi-professional terms for “diseases” like “hoarding” exist in other languages.

dent budget, but I couldn’t resist buying things marked down from $20 to $1.99. I thought it was a good use of money because equivalent goods cost much more in China. But as time went by and I started accumulating possessions in my dorm room, I realized there was such a thing as a bad deal. Isn’t it an inefficient use of resources to manufacture goods, then mark them down to irresistibly low prices, just so consumers could buy them (thinking “Why not?”), use them twice and relegate them to the back corners of a storage room? Before I get too far, let me pause and say that these are post-industrial problems. Why talk about “cutting back” in a country where, for the majority of the population, owning 100 things is still a luxury that people are striving toward? Is it relevant? The popular Chinese website Youmi ( recently posted a Chinese article on Dave’s “100 Thing Challenge.” Judging by the more strongly-worded reader comments, it is too early to talk about a post-consumption cleanse in China. One comment read, “These examples from developed countries only make us feel the discrepancy. ‘Cutting the fat’? We still hesitate when it comes to buying a meal.” Another said, “What kind of a challenge is this? 100 things sounds great!” Lastly, “When we were students we only needed 50 things to make it through the year.” So perhaps we in China are not at a point yet when we can widely discuss “scaling back.” But there’s no reason not to bring up the issue. Economists sometimes talk about the “late mover advantage,” referring to the benefit of learning from the mistakes of countries that industrialized earlier. On a personal level, it’s not a bad idea to start thinking about the state of over-consumption before we get there. What I really want to say here is this: To all the affluent Chinese (of which there are many) shopping up a storm, thank you for supporting the economy, but do you really need another pair of shoes? If we must emulate one developed country’s model of personal spending, let’s go for the French model: “buy quality, not quantity.”  Illustration by Xiang Zhaohui


few weeks ago, a long-awaited shipment of household items arrived from overseas. After battling with shady moving companies and customs agents for months, I could finally reclaim my stuff. But when it arrived at my doorstep, I didn’t feel a rush of joy. Instead, I panicked. Where do I put nearly a household full of things when I’ve been doing fine for a year without them? I thought back to last summer, when I had just quit my corporate job and traveled through Europe for a few months. Normally a clotheshorse, I discovered then that I could be very happy with relatively little. I had packed light for the meandering summer – some tank tops and pants in black and white, a nice dress for my college roommate’s wedding in Florence, plus accessories – and was finding enjoyment in taking good care of the few garments I had. At the time, I wrote on my blog about the blissful discovery “that I didn’t miss my Gucci bag or long for my crystal-studded heels.” As movers piled box upon box into my Beijing apartment, I wondered, “How much stuff do I really need?” According to a new movement in the US, I only need 100 things. The “100 Thing Challenge” was started by a “guy named Dave” (that’s the name of his website) in San Diego who wanted to simplify his life. In 2008, Dave Bruno told Time magazine, “Stuff starts to overwhelm you,” and so he had begun to whittle down his material possessions to just 100 items (or, in the beginning, 100 groups of items). (Incidentally, Dave is so averse to “things” in the plural that he intentionally maintains the grammatically incorrect “100 Thing” title for his mission). Over two years, Dave’s little adventure struck a chord with many Americans grappling with an over-consuming past and a recessionary present. A former yuppie interviewed by New York Times had changed her spending habits, job and lifestyle just by following the 100 things challenge. She said, “The idea that you need to go bigger to be happy is false. I really believe that the acquisition of material goods doesn’t bring about happiness.” The sentiments are echoed in popular culture, too. Peter Walsh, the host of a TV show called Clean Sweep that helps people purge extraneous belongings said, “People are finding that their homes are full of stuff, but their lives are littered with unfulfilled promises.” America has a history of over-consuming to levels unheard of elsewhere. I doubt quasi-professional terms for “diseases” like “hoarding” exist in other languages. I haven’t heard of anyone of Oprah’s public stature dedicating episodes to “de-cluttering” interventions. And I know for a fact that no other economy rivals America’s in getting people to buy things they don’t need through clever marketing. The American consumption machine works so well that it’s hard not to fall prey to its lure. When I first landed in the US I was on a stu-

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There Can be Only One


here have been many interpretations of Jean-Paul Satre’s line, “L’enfer, c’est les autres,” or “hell is other people,” but for most of my life I couldn’t formulate an image of others in my mind which portrayed them as inherently hellish, not because of any overabundance of positive qualities on their part, but because of a general lack of people. While this statement by a person writing in a Chinese magazine might initially come across as implausible, it refers to my formative years spent in rural Ireland, where the population density is low, and you can wander around in many places for hours without having to deal with the maddening crowds. So whenever handling humanity becomes a terrible bore one can skulk off down a quiet lane, and hide away from everything apart from the occasional lost donkey. This prolonged isolation leads Irish people to have an exaggerated sense of awareness of the thoughts and feelings of others. The end result is that most Irish people are unreasonably polite. For example, if someone accidentally bumps into you by virtue of the fact that they weren’t looking where they were going, the average Irish person will automatically say sorry, even though they have nothing to apologize for. This made for the greatest culture shock when arriving in China. I would agonize over every encounter with people on the street and become exceedingly vexed that others were not giving the interaction the attention I felt it merited. I regarded this indifference as a personal insult and it resulted in extended feelings of resentment at every knocked shoulder and every narrowly avoided collision. Every time someone jumped the queue

Every time someone jumped the queue I was filled with impotent rage NEWSCHINA I December 2010

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I was filled with impotent rage, every time someone barged their way in front without really noticing me I suppressed my anger internally. Some expats opine that one should remain aloof from the local customs when living as a legal alien, however, I have developed the contrary view that total immersion into the indigenous culture is an essential part of long-term living in a foreign land. Specifically, the way one goes about one’s day should reflect the native conventions. I realized that the appropriate response to dealing with huge numbers of people was to imagine that only I truly existed. I was the centre of the universe, and everyone and everything else was a figment of my imagination. This, however, lead to a curiously skewed form of existentialism. This philosophy reached a culmination on a recent trip to Beijing’s central Dongzhimen subway station. A large group of people were waiting outside, presumably for a bus, and they were oblivious to the hordes of people who might like to come in and out of one of the busiest public transportation nodes in the city. There was space for one person to come in or out of the entrance, and the girl walking in front of me dutifully walked down that remaining passage and stood still, awaiting her bus. In the past, this would have sent me into an internally suppressed rage at how this person could be so inconsiderate of others. But on this occasion I had an epiphany. I realized that this petite girl was not really there, so when I hoisted her into the air with my upper arm I felt no guilt or shame because she was merely an illusion, as were the people she crashed into, and the muffled curses I heard but knew weren’t real as I descended into the bowels of the earth. When people jumped in front of me in a queue I leaned closer to the counter and simply talked over them. Usually this meant that the queue jumper was terribly offended by what they perceived as terrible rudeness that they (operating from the premise that they were the centre of the universe) had to endure. But the key saving grace on my part is

Illustration by Xiang Zhaohui

By Niall O Murchadha

that I never looked the offending party in the eye because this would be an indication that I believed them to exist, which of course, I did not. When the interaction involves physical contact, as in me bumping into someone who is not looking in the direction in which they are travelling, I continue to walk, looking away at the last moment before we bump into each other, feigning the same look of shock and surprise I see on their face upon encountering another human being here in this metropolis of twenty million or so people. The pursuit of this philosophy requires a reasonable amount of upper body strength and an unwavering belief that everything is really make believe. Anger is the path to the dark side, and must be avoided. The development of my own personal martial art, Way of the Elbow, ensures that if I ever have the cheek to be standing in an elevator and get in the way of someone trundling on without paying attention, their soft, yielding flesh meets the bone of my elbow. Never having to say sorry is a truly liberating experience, and couldn’t recommend it more highly. In the future, after a period of training to improve my upper body strength, I intend to expand my immersion by walking around without looking in the direction I am traveling. 


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Why a Stronger Yuan is Beneficial to China

Current disputes over the value of the yuan are highly politicized. But that doesn’t mean China should ignore the long-term economic benefits of strengthening its currency. By Guo Kai


n recent months, the usually prosaic issue of international exchange rates has become a hot topic of conversation. Across the world, numerous governments have been forced to intervene in financial markets to prevent their national currencies from destablizing. However, this has led to concerns that a worldwide competitive devaluation, or “currency war” in more confrontational language, may be underway. A similar scenario revealed itself back in the late 1990s during the Asian financial crisis, when countries across Asia competed to devalue their currencies. Although China was also influenced by that financial crisis, it promised not to devalue its currency, which helped to stop a devaluation spiral, and eventually helped to stabilize financial markets in the region. It’s important to remember that by doing so, China won itself much international acclaim. This time, China faces mounting criticism, and is under pressure to appreciate its currency. There are essentially two main arguments. The first one is political, and argues that China has adopted a beggarthy-neighbor trade policy. In other words, China has purposefully driven down the yuan’s value to boost its economic growth, while causing economic stagnation and unemployment in other countries. The US is the most voracious adherent to this argument. But the US is the last country that should be criticizing China for driving down the value of its currency. Throughout the global financial crisis, the yuan has not lost value against the dollar. In fact, the yuan has risen slightly, following a 21 percent appreciation prior to the global financial crisis. Stagnation in the US has no clear connection with the value of the yuan. However, compared to other countries’ currencies, including Japan, South Korea, Brazil and southeastern Asian nations, the value of the yuan has dropped, exerting pressure on exports. It comes as no surprise to learn that other countries have joined the US in calling for a stronger Chinese currency. The second argument for the yuan’s appreciation comes from a basic economic perspective that argues simply that it would be economically beneficial to China. Economists have reached a consensus based

on China’s economic fundamentals that the yuan is undervalued and should appreciate in the long term, if not immediately. A stronger yuan would assist China to move away from an export-driven economy to wards an economy based on domestic consumption. As the yuan appreciates, profit from exports will decrease, which makes the domestic market more attractive to potential investors, and in turn, will lead to more domestic consumption. In this way, a stronger yuan can help China obtain a healthier growth model through market mechanisms

A stronger yuan would assist China in its move away from an exportoriented economy to an economy based on domestic consumption.

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instead of government intervention. Moreover, China’s current currency policy, linking the yuan to the dollar, is no longer in the country’s best interests. A more flexible exchange rate policy is now required. From a historical perspective, it has proven almost inevitable that a strong economy will give birth to a strong currency, and as China’s economy gets stronger, it is natural that the yuan will, too. After all, a currency that is independent of the dollar is also a prerequisite for an autonomous monetary policy. The reason that the current discussion and debates regarding the appreciation of yuan have become so painful and complicated is that the issue, which is supposed to be primarily economic, has become highly politicized. Even so, policymakers must not lose track of the bigger picture. Refusing to appreciate a currency for short-term political reasons is one thing, but ignoring the long-term economic benefits is quite another.  The author is an economist from the International Monetary Fund. (Rewritten by Yu Xiaodong)

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December 2010 Issue - News China